potential for enhancing india’s trade with iran: a … · the results of research studies can...

Potential for Enhancing India’s Trade with Iran : A Brief Analysis

Export-Import Bank of India 1

EXPORT-IMPORT BANK OF INDIA

WORKING PAPER NO. 18

POTENTIAL FOR ENHANCING INDIA’S TRADE WITH IRAN:A BRIEF ANALYSIS

EXIM Bank’s Working Paper Series is an attempt to disseminate the findings of research studies carried out in the Bank. The results of research studies can interest exporters, policy makers, industrialists, export promotion agencies as well as researchers. However, views expressed do not necessarily reflect those of the Bank. While reasonable care has been taken to ensure authenticity of information and data, EXIM Bank accepts no responsibility for authenticity, accuracy or completeness of such items.

© Export-Import Bank of IndiaJuly 2012



CONTENTS

Page No.

List of Tables 5

List of Charts 7

Executive Summary 9

1. Iran – Economic Overview 18

2. Foreign Trade of Iran 20

3. India’s Trade and Economic Relations with Iran 23

4. Potential Areas for Enhancing Bilateral Trade Relations 27

5. Observations and Recommendations 43

Annexures

Annexure I : International Sanctions against Iran 45Annexure II : Foreign Investments in Iran and Investment Regulations 47Annexure III : Potential Items of India’s Exports to Iran 50 (Asper6-DigitHSCommodityClassification)

Project team:

Mr. David Sinate, General Manager Mr. Vanlalruata Fanai, Chief ManagerMs. Debapriya Chakrabarti, Manager



LIST OF TABLES

Table No. Titles Page No.

1 Iran’sExportsofMajorCommoditiesin2001,2005&2010(US$mn) 10

2 Iran’sImportsofMajorCommoditiesin2001,2005&2010(US$mn) 11

3 India’sTradewithIran,2000-2010(US$mn) 12

4 TrendsinIndia’sExportsofMajorCommoditiestoIran,2001-2010(US$mn) 13

5 TrendsinIran’sImportsofMajorCommoditiesfromIndia,2001-2010(US$mn) 14

6 Iran’s Major Imports and India’s Share, 2010 15

1.1 Iran - Macroeconomic Indicators 18

2.1 Iran’sExportsofMajorCommoditiesin2001,2005&2010(US$mn) 21

2.2 Iran’sImportsofMajorCommoditiesin2001,2005&2010(US$mn) 22

3.1 India’sTradewithIran,2001-2010(US$mn) 23

3.2 TrendsinIndia’sExportsofMajorCommoditiestoIran,2001-2010(US$mn) 24

3.3 India’s Major Exports to Iran and Share in Iran’s Global Imports, 2010 25

3.4 India’sImportsofMajorCommoditiesfromIran,2001-2010(US$mn) 26

4.1 Iran’s Major Imports and India’s Share, 2010 28

4.2 Iran’sMajorSuppliersofMachineryandInstruments(HS-84) 29

4.3 PotentialItemsofExportstoIranunderMachineryandInstruments(HS-84) 29

4.4 Iran’sMajorSuppliersofIronandSteel(HS-72) 30

4.5 PotentialItemsofExportstoIranunderIron&Steel(HS-72) 30

4.6 Iran’sMajorSuppliersofElectricalandElectronicEquipment(HS-85) 31

4.7 PotentialItemsofExportstoIranunderElectricalandElectronicEquipment(HS-85) 31

4.8 Iran’sMajorSuppliersofVehiclesotherthanRailway(HS-87) 32

4.9 PotentialItemsofExportstoIranunderVehiclesotherthanRailway(HS-87) 32

4.10 Iran’sMajorSuppliersofPlasticsandArticles(HS-39) 33

4.11 PotentialItemsofExportstoIranunderPlasticsandArticles(HS-39) 33

4.12 Iran’sMajorSuppliersofMineralFuelsandOils(HS-27) 34

4.13 PotentialItemsofExportstoIranunderMineralFuelsandOils(HS-27) 34

4.14 Iran’sMajorSuppliersofOptical,PhotoandMedicalApparatus(HS-90) 35

4.15 PotentialItemsofExportstoIranunderOptical,PhotoandMedicalApparatus(HS-90) 35

4.16 Iran’sMajorSuppliersofPharmaceuticals(HS-30) 36



LIST OF TABLES

Table No. Titles Page No.

4.17 PotentialItemsofExportstoIranunderPharmaceuticals(HS-30) 36

4.18 Iran’sMajorSuppliersofResidues,WasteofFoodIndustry(HS-23) 37

4.19 PotentialItemsofExportstoIranunderResidues,WasteofFoodIndustry(HS-23) 37

4.20 Iran’sMajorSuppliersofSugarandSugarConfectionery(HS-17) 38

4.21 PotentialItemsofExportstoIranunderSugarandSugarConfectionery(HS-17) 38

4.22 Iran’sMajorSuppliersofMisc.ChemicalProducts(HS-38) 39

4.23 PotentialItemsofExportstoIranunderMisc.ChemicalProducts(HS-38) 39

4.24 Iran’sMajorSuppliersofAluminiumandArticles(HS-76) 40

4.25 PotentialItemsofExportstoIranunderAluminiumandArticles(HS-76) 40

4.26 Iran’sMajorSuppliersofEdibleFruits(HS-08) 41

4.27 PotentialItemsofExportstoIranunderEdibleFruits(HS-08) 41

4.28 Iran’sMajorSuppliersofOilseed(HS-12) 42

4.29 PotentialItemsofExportstoIranunderOilseed(HS-12) 42



LIST OF CHARTS

Chart No. Titles Page No.

2.1 Iran’sForeignTrade,2001-2010(US$bn) 20

3.1 India’sTradewithIran,2001-2010(US$bn) 23



ECONOMIC OVERVIEW

Real GDP of Iran, which averaged 6.4% during 2001-07, moderated to 0.6% in 2008. Growth, however, picked up in 2009 to 3.5%, but moderated to an estimated 2.5% in 2011, mainly owing to fall in production of hydrocarbons. Nominal GDP, on the other hand, has risen from US$ 309 bn in 2007 to an estimated US$ 475 bn in 2011.

Iranian real GDP growth is likely to be held back by tougher sanctions, subsidy cuts and overall declining oil production. Real GDP growth is expected to average 3.2% in 2011-13, as exports of crude are hit by tightening embargoes by the EU, with the Iranian authorities holding back oil production.

External Sector

On the external front, Iran’s current account surplus decreased from US$ 32.6 bn in 2007 to an estimated US$ 27.1 bn in 2011. With oil production and exports expected to fall over the period and non-oil exports curbed by sanctions, Iran’s external account is expected to be negatively

affected. As a result, current account is expected to turn into a deficit in 2013 at around 1%of GDP. Iran’s external position will depend on oil prices being highenoughtooffsetthedifficultyin selling exports caused by sanctions. The non-merchandise deficit is expected to remainrelatively steady.

Hydrocarbon Sector

Iran’s hydrocarbon sector remains the base of the country’s economy. Targets for increasing gas production have been missed, but the start-up of a number of delayed South Pars phases will make available sufficient gas forreinjectionintooilfields.

Fiscal Outlook

As a result of the limited scope for capital inflows, the declinein fiscal revenues has recentlyled to a reduction in government spending as a percentage of GDP.Accordingly,thegrossfiscalaccount, which incorporates all oil income, is estimated to record a much smaller surplus in 2012-13 as weaker tax revenue and falling oil production take a toll on revenue.

On the other hand, the government’s decision to phase out all subsidies by the end of 2014 is a crucial step in adjusting fiscal balances of the country.

The first general stage of theimplementation of the subsidy reform was put into effect in December 2010. Subsidies are estimated to cost the government around US$ 100 bn annually.

Inflation Dynamics

Tight monetary policy and falling global commodity prices led overall CPI inflation to fallsignificantlyfrom25.5%in2008to10.1% in 2010. Due to removal of subsidies,however,CPIinflationisestimated to exceed 21% in 2011. Further, with full annual effect of subsidy reductions on every-day items compounded by a recovery in global commodity prices, the CPIinflationisexpectedtocross23% in the following year.

Exchange Rate

TheIranianrial(IR)issubjecttovolatility as Iranians seek to shift their savings into safer assets such as gold or the US dollar. Bank Markazi Jomhouri Islami Iran(theCentralBankofIran)haschanged some 15% of its foreign exchange reserve to gold stock in 2010-11. The rial has slid dramatically since the end of 2011, at one point reaching a low of IR 23,000: US$1 on the black market. The central bank raised rates to try to prevent the rial weakening any further, but its ability to control the exchange rate has been limited. Bank Markazi announced

EXECUTIVESUMMARY



a new official rate of IR 12,260:US$1 in mid-January 2012. However, there is a possibility of a continued depreciation from this level to an average of IR14,996 by 2016-17 as Iran’s access to foreign exchange continued to be limited due to ongoing sanctions.

Challenges

Iran’s hydrocarbon sector is likely to remain the mainstay of the country’s economy. With targets for increasing gas

production being missed, Iran is expected to keep crude oil in the ground rather than risk being unable to export it. Product-ion will remain depressed until there is much-needed investment in the sector and, fundamentally, an improvement in the political situation. Iran’s economy will remain vulnerable to sanctions on the hydrocarbon sector. The lack of foreign investment and technology transfer had already dragged down production prior to the more restrictive sanctions. The EU embargo on Iranian oil,

however, may prompt Iran to try and shift more of its sales to Asian buyers—particularly China, India, South Korea and Japan, or to hold it in offshore tankers.

FOREIGN TRADE OF IRAN

Iran is one of the world’s major oil exporters, with hydrocarbon related exports accounting for around three-fourth of total export revenue. Iran’s total trade increased over four-fold during 2001-2008, from US$ 40 bn to

Table 1 : Iran’s Exports of Major Commodities in 2001, 2005 & 2010 (US$ mn)

CAGR HS Share Share Share in (%) Code Commodities 2001 in total 2005 in total 2010 total (%) 2001- (%) (%) 2010

All products 23904.0 100.0 60012.0 100.0 83785.0 100.0 27 Mineral fuels, oils 20367.8 85.2 52033.3 86.7 62640.6 74.8 13.3 29 Organic chemicals 213.5 0.9 730.5 1.2 2971.8 3.5 33.9 39 Plastics and articles 116.5 0.5 370.2 0.6 2827.6 3.4 42.5 8 Edible fruit, nuts 512.7 2.1 1255.2 2.1 2310.7 2.8 18.2 26 Ores, slag and ash 72.9 0.3 157.7 0.3 1239.0 1.5 36.9 57 Carpetsandothertextilefloor coverings 601.9 2.5 638.0 1.1 877.0 1.0 4.3 25 Salt, sulphur, lime, cement 102.1 0.4 169.5 0.3 808.5 1.0 25.8 7 Edible vegetables and certain roots and tubers 94.1 0.4 126.4 0.2 724.8 0.9 25.4 72 Iron and steel 206.9 0.9 981.9 1.6 638.0 0.8 13.3 84 Machinery & instruments 48.9 0.2 172.2 0.3 632.8 0.8 32.9 87 Vehicles other than railway 66.3 0.3 199.9 0.3 587.4 0.7 27.4 74 Copper and articles 90.0 0.4 117.4 0.2 579.1 0.7 23.0 28 Inorganic chemicals 50.2 0.2 200.8 0.3 576.6 0.7 31.1 69 Ceramic products 27.1 0.1 89.7 0.1 389.7 0.5 34.5 9 Coffee, tea, mate and spices 67.7 0.3 121.7 0.2 367.7 0.4 20.7

Source: Trade Map, ITC Geneva



US$ 189 bn, aided by growth in both exports and imports. Total trade declined in 2009 mainly reflecting sharp fall in exportdemand, before picking up in 2010. Iran’s total exports in 2010 stood at US$ 83.8 bn, as against US$ 23.9 bn in 2001, mainly largely on account of increase in exports of oil, organic chemicals, plastics and ores. Iran’s imports also increased over three-fold from US$ 16.2 bn in 2001 to US$ 54.7 bn

in 2010, driven by higher imports of machinery and instruments, iron and steel, electrical and electronic equipments, vehicles other than railway, cereals and plastics.

Major Exports Items

Trends in Iran’s exports of major commodities have been presented in Table 1. Minerals fuels and oils are the largest items of exports, followed by organic chemicals,

plastics and articles thereof, edible fruits & nuts, ores slag & ash,carpetsandothertextilefloorcoverings.

Major Import Items

Trends in Iran’s imports of major commodities have been presented in Table 2. Machinery and related products are the largest item in Iran’s import basket, followed by iron and steel, electrical and

Table 2 : Iran’s Imports of Major Commodities in 2001, 2005 & 2010 (US$ mn)

HS Share Share Share in CAGR Code Commodities 2001 in total 2005 in total 2010 total (%) 2001- (%) (%) (%) 2010

All products 16173.1 100 38674.7 100 54697.2 100 84 Machinery & instruments 3731.0 23.1 9520.6 24.6 11589.6 21.2 13.4 72 Iron and steel 1526.7 9.4 4069.2 10.5 7706.8 14.1 19.7 85 Electrical, electronic equipment 1338.9 8.3 2758.1 7.1 3018.5 5.5 9.4 87 Vehicles other than railway 1182.6 7.3 1111.4 2.9 2479.6 4.5 8.6 10 Cereals 1445.1 8.9 960.5 2.5 2284.8 4.2 5.2 39 Plastics and articles 526.8 3.3 1423.6 3.7 2165.0 4.0 17.0 73 Articles of iron or steel 471.0 2.9 1153.3 3.0 1838.2 3.4 16.3 27 Mineral fuels oils 561.9 3.5 3750.0 9.7 1472.5 2.7 11.3 90 Optical, photo, technical apparatus 438.9 2.7 725.5 1.9 1393.0 2.5 13.7 30 Pharmaceutical products 393.5 2.4 593.8 1.5 1255.2 2.3 13.7 48 Paper & paperboard 372.6 2.3 719.0 1.9 1148.5 2.1 13.3 29 Organic chemicals 384.2 2.4 743.6 1.9 1146.3 2.1 12.9 15 Animal, vegetable fats and oils 396.4 2.5 653.8 1.7 1137.7 2.1 12.4 2 Meat and edible meat offal 77.6 0.5 51.8 0.1 890.6 1.6 31.1 23 Residues, wastes of food industry 202.9 1.3 108.7 0.3 843.5 1.5 17.1 17 Sugars and sugar confectionery 187.0 1.2 138.7 0.4 790.0 1.4 17.3 40 Rubber and articles 213.6 1.3 383.7 1.0 775.8 1.4 15.4 38 Miscellaneous chemical products 435.5 2.7 464.4 1.2 738.8 1.4 6.0 44 Wood and articles of wood 53.8 0.3 196.0 0.5 619.8 1.1 31.2 76 Aluminium and articles 149.6 0.9 364.8 0.9 582.3 1.1 16.3




India’s Imports from Iran

As regards India’s imports from Iran, mineral fuels dominate the import basket, accounting for as much as 84.5% of India’s total imports from Iran (Table 5).

In 2010, Iran was the third largest source of imports of mineral fuels for India, accounting for 8.2% of India’s total imports of mineral fuels.

Iran is also a major source for India’s imports of plastics and articles thereof, as well as fertilizers, ores slag and ash.

INDIA’S ECONOMIC RELA-TIONS WITH IRAN

India and Iran hold regular bilateral talks on economic and trade issues at the Indo-Iran Joint CommissionMeeting(JCM).The16th JCM was held in New Delhi on July 8-9, 2010. During the

electronic equipment, vehicles, cereals, plastics and articles, and articles of iron or steel.

INDIA’S TRADE AND ECO-NOMIC RELATIONS WITH IRAN

Trade relations between India and Iranhavewitnessedasignificantrise during the last decade, with India’s total trade (exports plus imports) with Iran rising from US$ 520 mn in 2001 to US$ 10.5 bn in 2010. This buoyant trend has been supported by both rise in India’s exports to and imports from Iran, with India’s imports from Iran showing a much higher CAGR as compared to India’s exports to Iran (Table 3).

India’s trade balance with Iran which showed a surplus of US$ 428.8 mn in 2005, turned intoadeficitofUS$4.3bnin2006owing to sharp increase in oil imports.By2010,thetradedeficitstood at US$ 5.5 bn.

In 2010-11, Iran was India’s thirteenth largest trading partner, with a share of 2.1% of India’s total trade. During the same year Iran was the seventh largest source of imports for India, with a share of 3% of India’s total imports, and the twenty fourth largest export markets with a share of 1.1% of total India’s exports.

India’s Major Exports to Iran

During 2001-2010, India’s exports to Iran have risen close to ten-fold, from US$ 253.3 mn in 2001 to US$ 2.5 bn in 2010, due to rise in exports of inorganic chemicals, cereals, iron and steel and articles of iron or steel to Iran (Table 4). India’s exports basket to Iran is dominated by inorganic chemicals, articles of iron or steel and cereals, with these three itemsaccountingforasignificant50.6 % of India’s total exports to Iran in 2010.

Table 3 : India’s Trade with Iran, 2000 - 2010 (US$ mn)

2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 CAGR(%) 2001-2010

Export 253.3 492.2 893.0 1185.0 1073.0 1617.3 1845.3 2335.9 1949.1 2509.3 29.0

Import 266.9 254.2 267.7 355.9 644.2 5918.1 9165.6 13791.5 10591.7 7999.9 45.9

Total Trade 520.2 746.3 1160.7 1540.9 1717.2 7535.4 11010.8 16127.4 12540.8 10509.2 39.6

Trade Balance -13.7 238.0 625.3 829.1 428.8 -4300.7 -7320.3 -11455.6 -8642.6 -5490.7




JCM, 6 MoUs/agreements were signed:(i)AirServicesAgreement;(ii) Agreement on Transfer ofSentencedPersons; (iii)MoUonCooperation in New & Renewable Energy;(iv)MoUonCooperationin Small Scale Industry between National Small Industries Corporation (NSIC) and IranianSmall Industries and Industrial Parks Organisation (ISIPO); (v)Programme of Cooperation on Science & Technology and (vi)MoU on Cooperation between Central Pulp and Paper Research Institute of India (CPPRI) andGorgan University of Agricultural

Science and Natural Resources (GUASNR).

Joint ventures between India and Iran include the Irano -Hind Shipping Company, the Madras Fertilizer Company and the ChennaiRefinery.

Talks are on for setting up a number of projects, which include the IPI gas pipeline project, a long term supply of 5 mn tons of LNG, development of the Farsi oil and gasblocks,SouthParsgasfieldand LNG project, Chahbahar

container terminal project and Chahbahar-Zarand railway project.

The two countries are also in the process of finalizing aBilateral Investment Promotion &ProtectionAgreement (BIPPA)and a Double Taxation Avoidance Agreement(DTAA).

TheStateBankofIndia(SBI)hasarepresentativeofficeinTehran.In addition, companies which have a presence in Iran include ESSAR,ONGCVideshLtd.(OVL)and TATA.

Table 4: Trends in India’s Exports of Major Commodities to Iran, 2001- 2010 (US$ mn)

HS Code Commodities 2001 2005 2006 2007 2008 2009 2010

All products 253.3 1073.0 1617.3 1845.3 2335.9 1949.1 2509.3 28 Inorganic chemicals 6.7 33.3 66.0 33.2 86.7 38.7 465.7 73 Articles of iron or steel 10.1 104.0 130.2 94.7 123.1 175.2 435.8 10 Cereals 0.4 1.5 12.5 3.7 95.2 505.4 369.0 72 Iron and steel 31.4 149.7 133.6 180.1 180.3 199.4 192.0 84 Machinery & instruments 13.4 68.8 75.1 78.4 144.3 118.8 140.7 29 Organic chemicals 25.4 54.7 100.6 91.1 91.9 87.3 90.9 85 Electrical, electronic equipment 16.3 29.9 44.4 71.8 73.4 69.5 90.4 09 Coffee, tea, mate and spices 19.1 20.4 24.2 41.2 57.0 44.8 76.4 55 Manmadestaplefibres 3.2 10.0 19.0 20.1 18.8 38.0 67.1 30 Pharmaceutical products 12.9 26.4 20.6 22.4 37.6 48.2 54.1 54 Manmadefilaments 6.2 16.9 24.3 19.6 41.1 30.7 53.3 40 Rubber and articles thereof 15.1 21.1 36.4 47.1 49.9 40.9 46.4 02 Meat and edible meat offal 15.5 14.6 27.4 20.6 26.2 11.1 44.1 87 Vehicles other than railway 6.5 18.3 24.0 23.0 26.9 19.0 42.1 38 Miscellaneous chemical products 4.8 24.3 27.0 35.9 48.0 35.0 36.4 27 Mineral fuels & oils 0.2 337.0 687.7 870.6 983.1 287.8 31.7 23 Residues, wastes of food industry 2.6 0.5 0.8 14.4 16.3 29.7 20.3 39 Plastics and articles thereof 5.4 19.8 14.0 22.2 33.9 11.1 19.7 52 Cotton 1.4 3.7 6.1 6.8 18.1 18.0 19.4 48 Paper & paperboard 3.4 6.6 9.0 11.2 13.9 11.5 17.5




POTENTIAL AREAS FOR ENHANCING BILATERAL TRADE RELATIONS

Bilateral trade relations between India and Iran has witnessed a robust rising trend, with total trade between the two countries having stood at US$ 10.5 bn in 2010. At the same time, bilateral trade balance has been in Iran’s favour, with India’s trade deficit with Iran amounting to US$ 5.5 bn in 2010.

To enhance bilateral trade relations, as also to address the hightradedeficit,strategytoboosttrade relations with Iran would entail identification of potentialitems of India’s exports, which

would be based on the following analysis:

• Identification of major itemsin Iran’s import basket, and share of India in each product line(basedonHS-code)

• Selection of potential items,based on low share of India in Iran’s import basket of major commodities. This would entail identification ofpotential export items under each product category, up to 6-digit HS Commodity code.

Table 6 presents Iran’s major import items, in terms of 2-digit HS code, and India’s share in Iran’s global imports of these items. As

can be seen from the table, apart from cereals (HS-10), articles ofiron and steel (HS-73), organicchemical (HS-29), rubber andarticles (HS-40) and manmadestaple fibres (HS- 55), India’sshare in Iran’s major imports is still low, which highlights the potential for enhancing these exports to Iran.

The potential items of exports to Iran would include:

• Machinery & instruments (HS-84)

• Ironandsteel(HS-72)• Electrical, electronic

equipment(HS-85)• Vehicles other than railway

(HS-87)

Table 5 : Trends in Iran’s Imports of Major Commodities from India, 2001-2010 (US$ mn)


All Products 266.9 644.2 5918.1 9165.6 13791.5 10591.7 7999.9 27 Mineral fuels, oils, 34.2 7.1 5077.0 8368.2 12627.1 9584.4 6798.8 26 Ores, slag and ash 4.1 9.4 90.2 157.3 252.6 193.0 306.3 29 Organic chemicals 37.0 141.0 149.8 205.6 294.2 373.4 277.7 31 Fertilizers - 2.7 1.3 0.1 1.5 74.4 161.2 28 Inorganic chemicals, precious metal compound 30.3 47.0 84.8 35.9 231.5 106.7 140.2 39 Plastics and articles 0.0 4.2 29.6 8.6 11.0 55.1 107.4 25 Salt, sulphur, earth, stone, 15.8 40.7 34.2 41.2 156.3 23.2 49.6 08 Edible fruit, nuts 47.8 53.8 60.9 69.5 51.9 30.9 30.8 38 Miscellaneous chemical products 0.1 2.6 16.1 16.2 25.8 27.8 27.6 79 Zinc and articles 7.7 42.7 121.2 52.3 31.2 29.8 21.9 72 Iron and steel 2.6 152.1 140.8 90.2 9.2 48.9 17.1 84 Machinery & instruments 0.5 1.1 1.2 0.4 0.5 0.3 13.2 10 Cereals - - - - - 0.1 10.8

-Not available/negligibleSource: Trade Map, ITC Geneva



• Plasticandarticles(HS-39)

• Mineralfuels&oils(HS-27)

• Optical, photo and medicalapparatus(HS-90)

• Pharmaceutical products (HS-30)

• Residues, wastes of food

industry(HS-23)

• Sugarandsugarconfectionery(HS-17)

• Misc. chemical products (HS-38)

• Aluminium and articles (HS-76)

• Ediblefruits(HS-8)

• Oilseed(HS-12)Based on the above analysis, identificationofpotential itemsofIndia’s exports to Iran under the above select categories, up to 6-digit HS Commodity codes, has been undertaken.

Table 6: Iran’s Major Imports and India’s Share, 2010

HS Code Commodities Iran’s Imports Iran’s Imports India’s Share India’s Global from World from India in iran’s Exports (US$ mn) (US$ mn) Imports (%) (US$ mn)

Total All products 54697.2 2509.3 4.6 220408.5 84 Machinery & instruments 11589.6 140.7 1.2 8149.8 72 Iron and steel 7706.8 192.0 2.5 6996.2 85 Electrical, electronic equipment 3018.5 90.4 3.0 8706.5 87 Vehicles other than railway 2479.6 42.1 1.7 9285.9 10 Cereals 2284.8 369.0 16.2 2923.7 39 Plastics and articles thereof 2165.0 19.7 0.9 3630.3 73 Articles of iron or steel 1838.2 435.8 23.7 6367.7 27 Mineral fuels, oils 1472.5 31.7 2.2 37984.1 90 Optical, photo, technical apparatus 1393.0 10.9 0.8 1440.8 30 Pharmaceutical products 1255.2 54.1 4.3 6096.1 48 Paper & paperboard 1148.5 17.5 1.5 784.2 29 Organic chemicals 1146.3 90.9 7.9 8592.7 15 Animal,vegetable fats and oils 1137.7 2.3 0.2 716.3 23 Residues, wastes of food industry 843.5 20.3 2.4 2066.6 17 Sugars and sugar confectionery 790.0 6.8 0.9 1039.9 40 Rubber and articles 775.8 46.4 6.0 1675.4 38 Miscellaneous chemical products 738.8 36.4 4.9 2070.1 44 Wood and articles of wood, wood charcoal 619.8 0.7 0.1 163.8 76 Aluminium and articles 582.3 5.6 1.0 1328.0 8 Edible fruit, nuts 571.1 7.7 1.4 1088.7 12 Oil seed, oleagic fruits, grain, seed, fruit, etc, nes 545.7 6.9 1.3 1084.4 55 Manmade staple fibres 520.1 67.1 12.9 1621.8




OBSERVATIONS AND RECOMMENDATIONS

As observed in the preceding paragraphs, India’s trade relations with Iran has witnessed a robust trend in recent years, with total bilateral trade between the two countries having risen from US$ 520 mn in 2001 to US$ 10.5 bn in 20101. As per Ministry of Commerce and Industry, Government of India, bilateral trade between the two countries had reached US$13.7bnduringthefiscalyear2010-11. The two countries aim to increase their bilateral trade to US$ 25 bn by 20152.

India is a major source for Iran’s global imports of organic chemicals, cereals, articles of iron and steel and manmade staple fibres,accountingforasignificantshare in Iran’s global imports. However, in the case of other major commodities imported by Iran, such as machinery and instruments, iron and steel, pharmaceuticals, vehicles other than railway, India’s share in Iran’s global imports is low, and in some cases has even declined over the years. Given India’s export capability in these sectors, and the huge demand existing in Iran, potential exists to further enhance India’s trade relations with Iran in

line with potential sectors which present export opportunities for India.

WithIndia’stradedeficitwithIranwitnessing a rising trend in recent years, strategy to enhance trade relations with Iran, and thereby bridge the rising trade gap, would entail identification of potentialitems of India’s exports (upto 6-digit commodity classification)in line with Iran’s imports demand and India’s export capabilities, which has been undertaken in this study, as also identificationof potential exporters who could benefitfromprevailingandfuturemarket opportunitites in Iran.

Towards this end, Industry Associations and Chambers of Commerce and Industries could focus on the potential items and sectors identified to boosttrade between the two countries. Various trade promoting activities such as organizing Business to Government(B2G)andBusiness-to-Business (B2B) delegationvisits relating to identifiedpotential sectors; organizingfairs and exhibitions in Iran to showcase competencies of Indian corporate and to capture marketopportunities;andtie-upswith select industry associations/chambers in Iran in potential sectors would serve to strengthen

India’s trade linkages with Iran.

Trade with Iran – Facilitation

With a view to facilitate trade relations, India and Iran have put in place an enabling bilateral payments and settlement arrangements. Under this arrangement, UCO Bank has been allowed to open “Special Non-Resident Rupee Vostro Account” in the name of Iranian Banks, viz. Parsian Bank, Bank Pasargad, EN Bank and Saman Bank, subject to certain permissible credits and debits. These include, among others: Permissible Credits – Funding by inward remittances in foreign currency of the account of the Iranian banks for meeting payment obligations arising out of exports of goods including project exports to Iran; Permissible Debits – (i) Payment towardsexport proceeds realization; (ii) Repayment of Line of Creditextended by Exim Bank to Iran;(iii) Other debits for meetingpayments towards statutory dues, levies, cess, bank charges, etc, and (iv) Any other credits /debits specifically permitted byRBI. Under this Rupee Payment Mechanism, Indian exporters are allowed to receive export payments in Indian Rupees.

1As per Trade Map, ITC, UNCTAD.2EconomicTimes,“India,Iranlookat$25billiontradeby2015”,March12,2012(Onlineedition).



Indian exporters are also allowed to receive advance payment against exports from Iranian importers in Indian rupees though the above Rupee Payment Mechanism, subject to certain conditions / modalities. Further, ‘Setting-off’ of export receivables against import payables in respect of the same overseas buyer and supplier

with facility to make / receive payment of the balance of export receivables / import payables, if any, through the Rupee Payment Mechanism, may also be allowed, subject to certain conditions.

In light of the huge potential to enhance India’s exports to Iran and thereby boost bilateral trade

relations, such endeavours to facilitate bilateral trade and payments system would need to be encouraged, while efforts would need to be made to ensure the smooth functioning of this payment arrangement so that Indian exporters to Iran are benefitted.



Real GDP of Iran, which averaged 6.4% during 2001-07, moderated to 0.6% in 2008. Growth, however, picked up in 2009 to 3.5%, but moderated again to an estimated 2.5% in 2011, mainly owing to fall in production of hydrocarbons. Nominal GDP, on the other hand, has risen from US$ 309 bn in 2007 to an estimated US$ 475 bn in 2011 (Table 1.1).

Iranian real GDP growth is likely to be held back by tougher sanctions

1. Iran – Economic Overview

(Annexure I), subsidy cuts and overall declining oil production. Real GDP growth is expected to average 3.2% in 2011-13, as exports of crude are hit by tightening embargoes by the EU, with the Iranian authorities holding back oil production.

External Sector

On the external front, Iran’s current account surplus decreased from US$ 32.6 bn in 2007 to an estimated US$ 27.1 bn in 2011. With oil production and exports expected to fall over the period and non-oil exports curbed by sanctions, Iran’s external account is expected to be negatively affected. As a result, current

account is expected to turn into a deficitduring2013,ataround1%of GDP. Iran’s external position will depend on oil prices being highenoughtooffsetthedifficultyin selling exports caused by sanctions. The non-merchandise deficit is expected to remainrelatively steady (Annexure II).

Hydrocarbon Sector

Iran’s hydrocarbon sector remains the base of the country’s economy. Targets for increasing gas production have been missed, but the start-up of a number of delayed South Pars phases will make available sufficient gas forreinjectionintooilfields.

Table 1.1: Iran - Macroeconomic Indicators

2007 2008* 2009* 2010* 2011* 2012# 2013#

Nominal GDP (US$bn) 309.1 353.8 362.6 407.4 475.1 494.5 523.5

NominalGDP(IRtrn) 2,869.6 3,387.6 3,596.7 4,211.7 5,313.6 6,114.2 6,879.6

RealGDPGrowth(%) 10.8 0.6 3.5 3.2 2.5 3.4 3.8

Population(mn) 71.5 72.6 73.7 74.8 75.9 77.0 78.2

PublicSectorbalance(%ofGDP) 19.3 11.2 9.2 10.6 7.2 2.5 -0.7

ConsumerPrices(Annualavg.,%) 17.1 25.5^ 13.5^ 10.1^ 21.2 23.6 21.0

LendingInterestRates(avg.,%) 12.5 12.0^ 12.0^ 12.0^ 12.5 16.0 16.5

ExchangeRateIR:US$(Annualavg.) 9,281.0 9429.0^ 9864.0^ 10254.0^ 10620.0^ 12,260.0 13,130.0

TradeBalance(US$bn) 39.4 31.1^ 20.9^ 40.2^ 40.8 22.4 10.0

CurrentAccountBalance(US$bn) 32.6 22.9^ 10.9^ 25.4^ 27.1 8.4 -5.0

DebtStock(US$bn) 21.1 13.0^ 13.5^ 12.6 13.5 13.1 12.8

InternationalReserves(US$bn) 82.1 96.6 81.3 75.1 79.9 76.4 73.4 Notes:*-estimates;#-forecasts;^-actualsSource:IMF,EconomicIntelligenceUnit(EIU)



Fiscal Outlook

As a result of the limited scope for capital inflows, the declinein fiscal revenues has recentlyled to a reduction in government spending as a percentage of GDP.Accordingly,thegrossfiscalaccount, which incorporates all oil income, is estimated to record a much smaller surplus in 2012-13 as weaker tax revenue and falling oil production take a toll on revenue.

On the other hand, the government’s decision to phase out all subsidies by the end of 2014 is a crucial step in adjusting fiscal balances of the country.The first general stage of theimplementation of the subsidy reform was put into effect in December 2010. Subsidies are estimated to cost the government around US$ 100 bn annually.

Inflation Dynamics

Tight monetary policy and falling global commodity prices

led overall CPI inflation to fallsignificantlyfrom25.5%in2008to10.1% in 2010. Due to removal of subsidies,however,CPIinflationisestimated to exceed 21% in 2011. Further, with full annual effect of subsidy reductions on every-day items compounded by a recovery in global commodity prices, the CPIinflationisexpectedtocross23% in the following year.

Exchange Rate

The Iranian rial (IR) issubject tovolatility as Iranians seek to shift their savings into safer assets such as gold or the US dollar. Bank Markazi Jomhouri Islami Iran (the CentralBankofIran)haschangedsome 15% of its foreign exchange reserve to gold stock in 2010-11. Bank Markazi announced a new official rate of IR 12,260:US$1 in mid-January 2012. However, there is a possibility of a continued depreciation from this level to an average of IR14,996 by 2016-17 as Iran’s access to foreign exchange continued to be limited due to ongoing sanctions.

Challenges

Iran’s hydrocarbon sector is likely to remain the mainstay of the country’s economy. With targets for increasing gas production being missed, Iran is expected to keep crude in the ground rather than risk being unable to export it. Production will remain depressed until there is much-needed investment in the sector and fundamentally, an improvement in the political situation. Iran’s economy will remain vulnerable to sanctions on the hydrocarbon sector. The lack of foreign investment and technology transfer had already dragged down production prior to the more restrictive sanctions. The EU embargo on Iranian oil, however, may prompt Iran to try and shift more of its sales to Asian buyers—particularly China, India, South Korea and Japan, or to hold it in offshore tankers.



2. Foreign Trade of Iran

Iran is one of the world’s major oil exporters, with hydrocarbon related exports accounting for around three-fourth of total export revenue. Iran’s total trade increased over four-fold during 2001-2008, from US$ 40 bn to US$ 189 bn, aided by growth in both exports and imports. Total trade declined in 2009, mainly reflecting sharp fall in exportdemand, before picking up in 2010. Iran’s total exports in 2010 stood at US$ 83.8 bn, as against US$ 23.9 bn in 2001, mainly on account of increase in exports of oil, organic chemicals, plastics and ores. Iran’s imports also increased over three-fold from US$ 16.2 bn in 2001 to US$ 54.7 bn in 2010, driven by higher imports of machinery and instruments,

iron and steel, electrical and electronic equipments, vehicles other than railways, cereals and plastics (Chart 2.1).

Major Export Items

Trends in Iran’s exports of major commodities have been presented in Table 2.1. Mineral fuels and oils are the largest items of exports, followed by organic chemicals, plastics and articles, edible fruits & nuts, ores slag & ash, carpets andothertextilefloorcoverings.

Mineral fuels and oils remain the main foreign exchange earner for Iran, despite attempts to diversify, which have been prevented by low levels of foreign investment. Petrochemicals are expected to represent an increasing share of exports in the medium term. However, despite the govern-ment’s attempt to significantlyincrease gas exports, growth has been curtailed by rising domestic consumption, which is likely to

outgrow increases in production in the short to medium term. The imposition of sanctions over Iran’s refusal to suspend its nuclear programme has impacted exports (other than hydrocarbons), asbanks from western countires refuse to extend trade-credit facilities or transfer funds to Iranian banks.

Mineral fuels and oils are mostly exported to Taiwan, European countries, Iraq, China, UAE and India. Crude petroleum oil is the key exported item under this category accounting for over 55% of total mineral fuels and oils exported, with major destinations including China, Japan, South Korea, Italy, Spain and South Africa.

As regards exports of organic chemicals, which are the second largest items in Iran’s export basket, China is the largest export market, followed by, India, South Korea, Taiwan, UAE, Pakistan

Chart 2.1: Iran’s Foreign Trade, 2001 - 2010 (US$ bn)

Note: Data for 2007, 2008 and 2009 are sourced from DOTS, IMFSource:TradeMap,ITCGeneva;DOTS,IMF



and Philippines. Acyclic alcohol and their derivatives are the major exports under this category.

For Iran’s exports of plastics and articles, the major markets are China, UAE, Belgium, Turkey, Iraq, India and Afghanistan. In the case of edible fruit & nuts, Iraq, Hong Kong, UAE, Russia, Germany, India and Pakistan are the largest markets, together accounting for 59% of Iran’s total exports in 2010.

As regards exports of ores, slag and ash, China is the single largest

market with a dominant share of 92% of Iran’s total exports in 2010, followed by India, Pakistan and Iraq.

In the case of carpets and other textile floor coverings, the topmarkets are Afghanistan, US, UAE, Iraq and Lebanon.

In the case of salt, sulphur, lime and cement, China and Iraq are the largest export markets, together accounting for 59% of Iran’s total exports in 2010. Turkmenistan, Azerbaijan and Afghanistan are other key markets

for Iran’s salt, sulphur, lime and cement exports.

As regards edible vegetables, Iraq is the largest market, accounting for as much as 63% of Iran’s total imports in 2010, while Russia, UAE, Azerbaijan and Turkmenistan are other key markets.

Major Import Items

Trends in Iran’s imports of major commodities have been presented in Table 2.2. Machinery and related products are the largest item in

Table 2.1 : Iran’s Exports of Major Commodities in 2001, 2005 & 2010 (US$ mn)

HS Share Share Share in CAGR (%) Code Commodities 2001 in total 2005 in total 2010 total (%) 2001- (%) (%) 2010

All products 23904.0 100.0 60012.0 100.0 83785.0 100.0 14.9

27 Mineral fuels, oils 20367.8 85.2 52033.3 86.7 62640.6 74.8 13.3

29 Organic chemicals 213.5 0.9 730.5 1.2 2971.8 3.5 33.9

39 Plastics and articles 116.5 0.5 370.2 0.6 2827.6 3.4 42.5

08 Edible fruit, nuts 512.7 2.1 1255.2 2.1 2310.7 2.8 18.2

26 Ores, slag and ash 72.9 0.3 157.7 0.3 1239.0 1.5 36.9

57 Carpetsandothertextilefloorcoverings 601.9 2.5 638.0 1.1 877.0 1.0 4.3

25 Salt, sulphur, lime, cement 102.1 0.4 169.5 0.3 808.5 1.0 25.8

07 Edible vegetables and certain roots

and tubers 94.1 0.4 126.4 0.2 724.8 0.9 25.4

72 Iron and steel 206.9 0.9 981.9 1.6 638.0 0.8 13.3

84 Machinery & instruments 48.9 0.2 172.2 0.3 632.8 0.8 32.9

87 Vehicles other than railway 66.3 0.3 199.9 0.3 587.4 0.7 27.4

74 Copper and articles 90.0 0.4 117.4 0.2 579.1 0.7 23.0

28 Inorganic chemicals 50.2 0.2 200.8 0.3 576.6 0.7 31.1

69 Ceramic products 27.1 0.1 89.7 0.1 389.7 0.5 34.5

09 Coffee, tea, mate and spices 67.7 0.3 121.7 0.2 367.7 0.4 20.7




Iran’s import basket, followed by iron and steel, electrical and electronic equipment, vehicles, cereals, plastics and articles, and articles of iron or steel.

Imports of machinery and instruments, the largest item in Iran’s import basket, amounted to US$ 11.6 bn in 2010, with a share of 21% in the country’s total imports. UAE is the primary source of imports, accounting for as much for as 30% of Iran’s imports of these items, followed by China (15%) and Germany(13%).

Iron and steel imports, which accounted for 14% of Iran’s total imports, is the second largest item imported by Iran. The major supplier, UAE, accounted for 45% of Iran’s imports of iron and steel, followed by South Korea (14%),Germany (8%),Turkey (6%)andChina(3%).

As regards electrical & electronic equipments imports, which constitutes 5.5% of Iran’s total imports, UAE again dominated as the main source of Iran’s imports, accounting for 37% of Iran’s imports, followed by China

(20%). Other important sourcesof Iran’s imports of electrical and electronic equipments include Germany, South Korea, France, Italy, Turkey and India.

Vehicles other than railways accounted for 4.5% of Iran’s total imports in 2010. UAE was the major supplier to Iran, accounting for 23% of Iran’s total imports, followed by South Korea (22%),China and Sweden (9% each).Other important sources include Japan, Germany, France and Kuwait.

Table 2.2 : Iran’s Imports of Major Commodities in 2001, 2005 & 2010 (US$ mn)

HS Share Share Share in CAGR (%) Code Commodities 2001 in total 2005 in total 2010 total (%) 2001- (%) (%) 2010

All products 16173.1 100 38674.7 100 54697.2 100 14.4


72 Iron and steel 1526.7 9.4 4069.2 10.5 7706.8 14.1 19.7

85 Electrical, electronic equipment 1338.9 8.3 2758.1 7.1 3018.5 5.5 9.4


10 Cereals 1445.1 8.9 960.5 2.5 2284.8 4.2 5.2

39 Plastics and articles 526.8 3.3 1423.6 3.7 2165.0 4.0 17.0

73 Articles of iron or steel 471.0 2.9 1153.3 3.0 1838.2 3.4 16.3


90 Optical, photo, technical apparatus 438.9 2.7 725.5 1.9 1393.0 2.5 13.7

30 Pharmaceutical products 393.5 2.4 593.8 1.5 1255.2 2.3 13.7

48 Paper & paperboard 372.6 2.3 719.0 1.9 1148.5 2.1 13.3


15 Animal, vegetable fats and oils 396.4 2.5 653.8 1.7 1137.7 2.1 12.4

23 Residues, wastes of food industry 202.9 1.3 108.7 0.3 843.5 1.5 17.1

17 Sugars and sugar confectionery 187.0 1.2 138.7 0.4 790.0 1.4 17.3

40 Rubber and articles 213.6 1.3 383.7 1.0 775.8 1.4 15.4

38 Miscellaneous chemical products 435.5 2.7 464.4 1.2 738.8 1.4 6.0

44 Wood and articles of wood 53.8 0.3 196.0 0.5 619.8 1.1 31.2

76 Aluminium and articles 149.6 0.9 364.8 0.9 582.3 1.1 16.3




3. India’s Trade and Economic Relations with Iran

TRENDS IN INDO-IRAN TRADE

Trade relations between India and Iranhavewitnessedasignificantrise, during the last decade, with India’s total trade (exports plus

imports) with Iran rising from US$ 520 mn in 2001 to US$ 10.5 bn in 2010. This buoyant trend has been supported by both rise in India’s exports to and imports from Iran, with India’s imports showing a much higher CAGR as compared to India’s exports to Iran (Table 3.1 & Chart 3.1).

India’s trade balance with Iran which showed a surplus of US$ 428.8 mn in 2005, moved intoadeficitofUS$4.3bnin2006

owing to sharp increase in oil imports.By2010,thetradedeficitstood at US$ 5.5 bn.

In 2010-11, Iran was India’s thirteenth largest trading partner, with a share of 2.1% of India’s total trade. During the same year, Iran was the seventh largest source of imports for India, with a share of 3% of India’s total imports, and the twenty-fourth largest export markets, with a share of 1.1% of India’s total exports.

Table 3.1 : India’s Trade with Iran, 2001 - 2010 (US$ mn)

2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 CAGR(%) 2001-2010

Export 253.3 492.2 893.0 1185.0 1073.0 1617.3 1845.3 2335.9 1949.1 2509.3 29.0

Import 266.9 254.2 267.7 355.9 644.2 5918.1 9165.6 13791.5 10591.7 7999.9 45.9

Total Trade 520.2 746.3 1160.7 1540.9 1717.2 7535.4 11010.8 16127.4 12540.8 10509.2 39.6

Trade Balance -13.7 238.0 625.3 829.1 428.8 -4300.7 -7320.3 -11455.6 -8642.6 -5490.7


Chart 3.1 : India’s Trade with Iran, 2001 - 2010 (US$ bn)




India’s Major Exports to Iran

During 2001-2010, India’s exports to Iran have risen close to ten-fold, from US$ 253.3 mn in 2001 to US$ 2.5 bn in 2010, due to rise in exports of inorganic chemicals, cereals, iron and steel and articles of iron or steel to Iran (Table 3.2). India’s exports basket to Iran is dominated by inorganic chemicals, articles of iron or steel and cereals, with these three itemsaccountingforasignificant

50.6 % of India’s total exports to Iran in 2010.

India’s Major Exports to Iran and Share in Iran’s Global Imports

While India’s overall exports to Iran have depicted a robust trend in recent years, an analysis of the share of India’s major exports to Iran vis-à-vis Iran’s global imports of these items would reveal the tremendous scope to enhance India’s exports to Iran.

This analysis has been presented in Table 3.3. The following observations can be discerned from the table:

• Inthecaseofcoffee,teaandspices (HS-09), manmadefilaments (HS-54), articles ofironandsteel(HS-73),cereals(HS-10), manmade staplefibres (HS-55) and cotton (HS-52), India is a majorsource for Iran’s imports, accounting for a significantshare in Iran’s globalimports;

Table 3.2: Trends in India’s Exports of Major Commodities to Iran, 2001-2010 (US$ mn)


All products 253.3 1073.0 1617.3 1845.3 2335.9 1949.1 2509.3

28 Inorganic chemicals 6.7 33.3 66.0 33.2 86.7 38.7 465.7

73 Articles of iron or steel 10.1 104.0 130.2 94.7 123.1 175.2 435.8

10 Cereals 0.4 1.5 12.5 3.7 95.2 505.4 369.0

72 Iron and steel 31.4 149.7 133.6 180.1 180.3 199.4 192.0



85 Electrical, electronic equipment 16.3 29.9 44.4 71.8 73.4 69.5 90.4

09 Coffee, tea, mate and spices 19.1 20.4 24.2 41.2 57.0 44.8 76.4

55 Manmadestaplefibres 3.2 10.0 19.0 20.1 18.8 38.0 67.1

30 Pharmaceutical products 12.9 26.4 20.6 22.4 37.6 48.2 54.1

54 Manmadefilaments 6.2 16.9 24.3 19.6 41.1 30.7 53.3

40 Rubber and articles thereof 15.1 21.1 36.4 47.1 49.9 40.9 46.4

02 Meat and edible meat offal 15.5 14.6 27.4 20.6 26.2 11.1 44.1



27 Mineral fuels & oils 0.2 337.0 687.7 870.6 983.1 287.8 31.7

23 Residues, wastes of food industry 2.6 0.5 0.8 14.4 16.3 29.7 20.3

39 Plastics and articles thereof 5.4 19.8 14.0 22.2 33.9 11.1 19.7

52 Cotton 1.4 3.7 6.1 6.8 18.1 18.0 19.4

48 Paper & paperboard 3.4 6.6 9.0 11.2 13.9 11.5 17.5




Table 3.3: India’s Major Exports to Iran and Share in Iran’s Global Imports, 2010

HS Code Commodities Iran’s imports Iran’s imports India’s share from India from the World in Iran’s global (US$ mn) (US$ mn) imports (%)

All Products 2509.3 54697.2 4.6

73 Articles of iron or steel 435.8 1838.2 23.7

10 Cereals 369.0 2284.8 16.2

72 Iron and steel 192.0 7706.8 2.5

84 Machinery & instruments 140.7 11589.6 1.2

29 Organic chemicals 90.9 1146.3 7.9

85 Electrical, electronic equipment 90.4 3018.5 3.0

09 Coffee, tea and spices 76.4 184.3 41.5

55 Manmade staple fibres 67.1 520.1 12.9

30 Pharmaceutical products 54.1 1255.2 4.3

54 Manmade filaments 53.3 218.8 24.4

40 Rubber and articles thereof 46.4 775.8 6.0

02 Meat and edible meat offal 44.1 890.6 4.9

87 Vehicles other than railway 42.1 2479.6 1.7

38 Miscellaneous chemical products 36.4 738.8 4.9

27 Mineral fuels & oils 31.7 1472.5 2.2

23 Residues, wastes of food industry 20.4 843.5 2.4

39 Plastics and articles 19.7 2165.0 0.9

52 Cotton 19.4 113.9 17.0

48 Paper & paperboard 17.5 1148.5 1.5


• However,inthe case of other major exports to Iran, the share of India in Iran’s basket is low. In particular, the low share of India in Iran’s import basket in items like machinery andinstruments(HS-84),ironand steel (HS-72), electricaland electronic equipments (HS-85), plastics and articles(HS-39), would serve tohighlight the tremendous

scope to enhance such exports to Iran.

India’s Imports from Iran

As regards India’s imports from Iran, mineral fuels and oils dominate the import basket, accounting for as much as 84.5% of India’s total imports from Iran (Table 3.4).

In 2010, Iran was the third largest source of imports of mineral fuels and oils for India, accounting for 8.2% of India’s total imports of mineral fuels. Iran is also a major source for India’s imports of plastics and articles as well as fertilizers, ores slag and ash with asignificantshareinIndia’sglobalimports.



Table 3.4: India’s Imports of Major Commodities from Iran, 2001-2010 (US$ mn)


All Products 266.9 644.2 5918.1 9165.6 13791.5 10591.7 7999.9


26 Ores, slag and ash 4.1 9.4 90.2 157.3 252.6 193.0 306.3


31 Fertilizers - 2.7 1.3 0.1 1.5 74.4 161.2

28 Inorganic chemicals, precious

metal compound 30.3 47.0 84.8 35.9 231.5 106.7 140.2

39 Plastics and articles - 4.2 29.6 8.6 11.0 55.1 107.4

25 Salt, sulphur, lime, cement 15.8 40.7 34.2 41.2 156.3 23.2 49.6

08 Edible fruit, nuts 47.8 53.8 60.9 69.5 51.9 30.9 30.8


79 Zinc and articles 7.7 42.7 121.2 52.3 31.2 29.8 21.9

72 Iron and steel 2.6 152.1 140.8 90.2 9.2 48.9 17.1


10 Cereals - - - - - 0.1 10.8


INDIA’S ECONOMIC RELA-TIONS WITH IRAN3

India and Iran hold regular bilateral talks on economic and trade issues at the Indo-Iran Joint CommissionMeeting(JCM).The16th JCM was held in New Delhi on July 8-9, 2010. During the JCM, 6 MoUs/agreements were signed:(i)AirServicesAgreement;(ii) Agreement on Transfer ofSentencedPersons; (iii)MoUonCooperation in New & Renewable Energy;(iv)MoUonCooperationin Small Scale Industry between National Small Industries Corporation (NSIC) and IranianSmall Industries and Industrial Parks Organisation (ISIPO);

(v) Programme of Cooperationon Science & Technology and (vi)MoUonCooperationbetweenCentral Pulp and Paper Research Institute of India (CPPRI) andGorgan University of Agricultural Science and Natural Resources (GUASNR).

Joint ventures between India and Iran include the Irano - Hind Shipping Company, the Madras Fertilizer Company and the ChennaiRefinery.

Talks are on for setting up a number of projects, which include the IPI gas pipeline project, a long term supply of 5 mn tons of LNG, development of the Farsi oil and

gasblocks,SouthParsgasfieldand LNG project, Chahbahar container terminal project and Chahbahar-Zarand railway project.

However, the two countries are also in the process of finalizinga Bilateral Investment Promotion &ProtectionAgreement (BIPPA)and a Double Taxation Avoidance Agreement(DTAA).

TheStateBankofIndia(SBI)hasarepresentativeofficeinTehran.In addition, companies which have a presence in Iran include ESSAR,ONGCVideshLtd.(OVL)and TATA.

3‘India-Iran Relations’ , Ministry of External Affairs, Govt. of India, January 2012



4. Potential Areas for Enhancing Bilateral Trade Relations

As highlighted in the previous chapter, bilateral trade relations between India and Iran has witnessed a robust trend, with total trade between the two having stood at US$ 10.5 bn in 2010. At the same time, bilateral trade balance has been in Iran’s favour, with India’s trade deficit with Iran amounting to US$ 5.5 bn in 2010.

To enhance bilateral trade relations, as also to address the hightradedeficit,strategytoboosttrade relations with Iran would entail identification of potentialitems of India’s exports, which would be based on the following analysis:

l Identification of major itemsin Iran’s import basket, and share of India in each product line(basedonHS-code)

l Selection of potential items, based on low share of India in

Iran’s import basket of major commodities, keeping in view India’s export capability in the global market. This would entail identification ofpotential export items under each product category, up to 6-digit HS commodity code.

Table 4.1 presents Iran’s major import items, in terms of 2-digit HS code, and India’s share in Iran’s global imports of these items. As can be seen from the table, apart from cereals (HS-10), articlesof iron or steel (HS-73), organicchemical (HS-29), rubber andarticles (HS-40) and manmadestaple fibres (HS-55), India’sshare in Iran’s major imports is still low, which highlights the potential for enhancing these exports to Iran.

In fact, India’s share in the top four items in Iran’s import basket, is very low, which indicates a large scope for enhancing India’s exports of these items to Iran, in line with huge import demand in Iran. At the same time, these items are amongst India’s leading export items in the global market.

Based on the above criteria, as also on India’s global export capability, potential items of export to Iran would include:

l Machinery & instruments (HS-84)

l Ironandsteel(HS-72)

l Electrical and electronic equipment(HS-85)

l Vehicles other than railway (HS-87)

l Plasticandarticles(HS-39)

l Mineralfuels&oils(HS-27)

l Optical, photo and medical apparatus(HS-90)

l Pharmaceutical products (HS-30)

l Residues, wastes of food industry(HS-23)

l Sugar and sugar confection-ery(HS-17)

l Misc. chemical products (HS-38)

l Aluminium and articles (HS-76)

l Ediblefruits(HS-8)

l Oilseed(HS-12)

Based on the above analysis, identification of potential itemsof India’s exports to Iran under the above select categories, up to 6-digit HS commodity codes, has been undertaken (Annexure III).



Table 4.1: Iran’s Major Imports and India’s Share, 2010

HS Code Commodities Iran’s Imports Iran’s Imports India’s Share India’s Global from World from India in iran’s Exports (US$ mn) (US$ mn) Imports (%) (US$ mn)

Total All products 54697.2 2509.3 4.6 220408.5

84 Machinery & instruments 11589.6 140.7 1.2 8149.8

72 Iron and steel 7706.8 192.0 2.5 6996.2

85 Electrical, electronic equipment 3018.5 90.4 3.0 8706.5

87 Vehicles other than railway 2479.6 42.1 1.7 9285.9

10 Cereals 2284.8 369.0 16.2 2923.7

39 Plastics and articles 2165.0 19.7 0.9 3630.3

73 Articles of iron or steel 1838.2 435.8 23.7 6367.7

27 Mineral fuels, oils 1472.5 31.7 2.2 37984.1

90 Optical, photo, technical, apparatus 1393.0 10.9 0.8 1440.8

30 Pharmaceutical products 1255.2 54.1 4.3 6096.1

48 Paper & paperboard 1148.5 17.5 1.5 784.2

29 Organic chemicals 1146.3 90.9 7.9 8592.7

15 Animal,vegetable fats and oils, 1137.7 2.3 0.2 716.3

23 Residues, wastes of food industry 843.5 20.3 2.4 2066.6

17 Sugars and sugar confectionery 790.0 6.8 0.9 1039.9

40 Rubber and articles 775.8 46.4 6.0 1675.4

38 Miscellaneous chemical products 738.8 36.4 4.9 2070.1

44 Wood and articles of wood, wood charcoal 619.8 0.7 0.1 163.8

76 Aluminium and articles thereof 582.3 5.6 1.0 1328.0

08 Edible fruit, nuts 571.1 7.7 1.4 1088.7

12 Oil seed, oleagic fruits, grain, seed, fruit, etc, nes 545.7 6.9 1.3 1084.4

55 Manmade staple fibre 520.1 67.1 12.9 1621.8




Machinery & Instruments

(HS-84)

Machinery and instruments

are the largest item in Iran’s

import basket, amounting to

US$ 11.6 bn in 2010, with a share

of 21.2% of Iran’s total imports.

The major suppliers to Iran are

UAE, China, Germany and Italy

(Table 4.2). While India’s exports

of these items to Iran have risen

from US$ 75.1 mn in 2006 to

US$ 140.7 mn in 2010, India’s

share in Iran’s imports was

marginal at 1.2%, which highlights

the potential to further enhance

these exports to Iran.

According to 6-digit HS commodity

classification code, potential

items of exports to Iran under

this category, based on import

demand in Iran and India’s export

capability, have been presented in

Table 4.3.

Table 4.2: Iran’s Major Suppliers of Machinery and Instruments (HS-84)

Value (US$ mn) % share in Iran’s imports 2006 2010 2006 2010

World 1547.6 11589.6 100.0 100.0UAE - 3416.4 - 29.5China 599.4 1719.5 38.7 14.8Germany - 1529.1 - 13.2Italy - 1157.8 - 10.0South Korea - 547.6 - 4.7Turkey - 443.7 - 3.8Japan 293.6 404.6 19.0 3.5France 278.2 251.9 18.0 2.2Sweden - 242.0 - 2.1Spain - 210.7 - 1.8


Table 4.3: Potential Items of Exports to Iran under Machinery andInstruments (HS- 84)

HS Code Commodities Iran’s Global India’s Global Imports, 2010 Exports, 2010 (US$ mn) (US$ mn)

840991 Parts for spark-ignition type engines nes 259.6 165.6 840999 Parts for diesel and semi-diesel engines 181.4 456.6 841090 Parts of hydraulic turbines & water wheels 12.9 32.1 841199 Parts of gas turbines nes 883.0 120.1 841430 Compressors of a kind used in refrigerating equipment 264.3 23.3 841440 Air compressors mounted on a wheeled chassis for towing 73.8 31.7 841480 Air or gas compressors, hoods 66.2 241.4 841510 Air conditioning machines window or wall types, self-contained 169.8 17.1 841810 Combinedrefrigerator-freezers,fitted with separate external doors 128.4 37.8 844250 Printing type, blocks, plates, & other printing components 6.9 20.5 845899 Lathes for removing metal 46.3 37.5 847130 Portable digital computers <10kg 308.8 29.1 847170 Computer data storage units 117.8 121.7 847989 Machines & mechanical appliances nes having individual functions 267.9 113.6 848180 Taps, cocks, valves and similar appliances, nes 164.3 334.4 848210 Bearings, ball 113.8 41.1 848410 Gaskets of metal sheeting combined with other material 23.1 52.2




Iron and Steel (HS-72)

Iron and steel are the second

largest item in Iran’s import basket.

In 2010, these imports amounted

to US$ 7.7 bn with a share of 14%

in Iran’s total import basket. Major

suppliers to Iran are UAE, South

Korea, Germany, Turkey and

China (Table 4.4).

Potential to enhance India’s

exports to Iran can be accessed

from the fact that India’s exports of

US$ 192 mn in 2010 accounts for

only 2.5% of Iran’s total imports,

a steep decline from the 16.7%

share in 2006.

In light of these, and to enhance

these exports to Iran, potential

items of exports under this

category according to 6-digit HS

commodityclassificationcodeare

presented in Table 4.5.

Table 4.4: Iran’s Major Suppliers of Iron and Steel (HS-72)


World 797.8 7706.8 100.0 100.0UAE - 3430.8 - 44.5South Korea - 1038.6 - 13.5Germany - 633.6 - 8.2Turkey - 456.1 - 5.9China 95.9 235.2 12.0 3.1UK - 209.1 - 2.7Switzerland 3.5 199.8 0.4 2.6Japan 132.8 196.8 16.6 2.6India 133.6 192.0 16.7 2.5

Austria - 179.2 - 2.3

-Not available/negligible


Table 4.5: Potential Items of Exports to Iran under Iron and Steel (HS- 72)


720211 Ferro-manganese (weight more than2%ofcarbon) 68.1 101.6 720219 Ferro-manganese (weight no morethan2%ofcarbon) 39.2 31.3 720839 Hot roll iron/steel nes, coil >600mm x <3mm 1098.5 74.5 720851 Hot roll iron/steel, not coil >600mm x >10mm 516.8 47.7 720916 Cold rolled iron/steel, coils >600mm x 1-3mm 60.4 76.5 720917 Cold rolled iron/steel, coils >600mm x 0.5-1mm 204.4 60.6 720918 Cold rolled iron/steel, coils >600mm x <0.5mm 67.2 231.8 721049 Flat rolled prod,i/nas,plated or coated with zinc,>/=600mm wide, nes 166.2 662.5 721012 Flat rolld prod,i/nas,platd or coatd with tin,>/=600mm wide,<0.5mm thk 154.3 66.4 721070 Flat rolled products, painted, varnished 96.6 174.3 721391 Hot rolled bar/rod, irregular coils, <14mm diam 245.2 64.4 721934 Flat rolled prod, stainless steel, cr,w>/=600mm,0.5mm</=thick <1mm 87.7 16.3 721990 Flat rolled prod, stainless steel, 600mm or more wide, nes 54.5 33.3




Electrical and Electronic Equipment (HS-85)

Iran’s imports of electrical and electronic equipments increased more than threefold from US$ 894.9 mn in 2006 to US$ 3.0 bn in 2010, accounting for around 5.5% of the country’s total imports and ranks as the third largest item in the country’s imports. The major suppliers to Iran are UAE, China, Germany and South Korea, with UAE and China together accounting for as much as 57% of Iran’s global imports of these items (Table 4.6).

Iran’s imports from India for this commodity has risen from US$ 44.4 mn in 2006 to US$ 90.4 mn in 2010. India accounts for 3% share in Iran’s global imports of these items. To enhance exports to Iran, potential items under this category, as per 6-digit HS commodity classific-ation have been presented in Table 4.7.

Table 4.6: Iran’s Major Suppliers of Electrical and Electronic Equipment (HS-85)

Value (US$ mn) % share in Iran’s imports

2006 2010 2006 2010

World 894.9 3018.5 100.0 100.0UAE - 1121.2 - 37.1

China 333.1 609.1 37.2 20.2

Germany - 197.4 - 6.5

South Korea - 171.6 - 5.7

France 153.5 91.1 17.2 3.0

India 44.4 90.4 5.0 3.0Italy - 79.9 - 2.6

Turkey - 78.1 - 2.6

Sweden - 54.7 - 1.8

Hong Kong 15.7 39.8 1.8 1.3

Japan 64.8 39.3 7.2 1.3



Table 4.7: Potential Items of Exports to Iran under Electrical andElectronic Equipment (HS-85)


850231 Wind-powered generating equipment 6.6 122.9 851140 Starter motors 5.2 51.9 851420 Industrial& laboratory electric induction/dielectric furnaces & ovens 14.1 15.1 852990 Parts suitable f use solely/princ w the app of headings 85.25 to 85.28 282.4 77.3 854511 Carbon or graphite electrodes, of a kind used for furnaces 128.8 211.3




Vehicles other than Railway

(HS- 87)

Iran’s import of vehicles

other than railway rose from

US$ 623 mn in 2006 to

US$ 2.5 bn in 2010, with the

major suppliers being UAE, South

Korea and China (Table 4.8).

In 2010, Iran’s imports of these

items from India amounted to

US$ 42.1 mn. accounting for a

marginal share of 1.6% of Iran’s

global imports. With India’s export

capability and large demand

existing in Iran, the potential

items of exports as per 6-digit

HS commodity code have been


Table 4.8: Iran’s Major Suppliers of Vehicles other than Railway (HS-87)


World 623.0 2479.6 100.0 100.0UAE - 589.2 - 23.8South Korea - 559.9 - 22.6China 319.2 245.1 51.2 9.9Sweden - 235.0 - 9.5Japan 72.6 173.5 11.6 7.0Germany - 158.0 - 6.4France 137.6 71.8 22.1 2.9Kuwait 54.6 71.7 8.8 2.9Oman 10.3 66.8 1.7 2.7Turkey - 65.3 - 2.6

Spain - 59.4 - 2.4



Table 4.9: Potential Items of Exports to Iran under Vehicles other than Railway (HS-87)


870190 Wheeled tractors 64.3 516.9 870321 Automobiles with reciprocating piston engine displacing not more than 1000 cc 7.1 2110.2 870322 Automobiles with reciprocating piston engine displacing > 1000 cc to 1500 cc 14.1 2151.8 870323 Automobiles w reciprocatg piston engine displacg > 1500 cc to 3000 cc 219.0 110.0 870410 Dump trucks designed fo r off-highway use 53.2 310.3 870600 Chassisfittedwenginesforthevehicles of heading Nos 87.01 to 87.05 25.7 155.5 870810 Bumpers and parts for motor vehicles 11.4 207.9 870840 Tansmissions for motor vehicles 129.2 148.7 870850 Drive axles with differential for motor vehicles 58.5 74.4 871419 Motorcycle parts 74.5 99.5 871499 Bicycle parts 11.9 65.0 Source: Trade Map, ITC Geneva



Plastics and Articles (HS-39)

Iran’s imports of plastics

and articles increased from

US$ 212.1 mn in 2006 to

US$ 2.2 bn in 2010, with the major

suppliers being UAE, South Korea,

China and Germany (Table 4.10).

India’s exports of these items to

Iran forms a marginal 0.9% of

Iran’s imports.

Under this category, the potential

items of India’s exports to Iran,

as per 6-digit HS commodity

classification are presented in

Table 4.11.

Table 4.10: Iran’s Major Suppliers of Plastics and Articles (HS-39)


World 212.1 2165.0 100.0 100.0UAE - 565.0 - 26.1South Korea - 435.4 - 20.1China 60.1 260.8 28.4 12.0Germany - 170.9 - 7.9Turkey - 131.9 - 6.1Chinese Taipei - 112.1 - 5.2Saudi Arabia - 54.0 - 2.5Italy - 44.1 - 2.0USA - 35.9 - 1.7Switzerland 0.4 35.1 0.2 1.6Belgium - 33.4 - 1.5Singapore - 29.6 - 1.4France 32.6 27.1 15.4 1.3Japan 11.5 25.7 5.4 1.2


Table 4.11: Potential Items of Exports to Iran under Plastics andArticles (HS-39)


390110 Polyethylenehavingaspecific gravity of less than 0.94 85.6 23.2 390120 Polyethylenehavingaspecific gravity of 0.94 or more 162.7 77.5

390210 Polypropylene 120.4 800.0 390690 Acrylic polymers nes, in primary forms 94.9 42.0 390760 Polyethylene terephthalate 93.9 458.4 390950 Polyurethanes in primary forms 167.9 16.9 391231 Carboxymethylcellulose and its salts 4.0 12.3 391290 Cellulose derivatives nes, in primary forms 10.6 9.2 391400 Ion-exchangers based on polymers 3.9 17.7 392069 Film and sheet etc, non-cellular etc, of polyesters 8.4 130.5 392329 Sacks and bags (including cones)ofplasticsnes 6.2 148.1




Mineral Fuels and Oils (HS-27)

Iran’s imports of mineral

fuels and oils amounted to

US$ 1.5 bn in 2010, as compared to

US$ 1.6 bn seen in 2006. Main

suppliers in 2010 were Singapore,

Ukraine and UAE. India’s exports

of these items to Iran amounted to

US$ 31.7 mn in 2010, accounting

for 2.2% of Iran’s total imports,

a sharp decline from the 42.3%

share in 2006 (Table 4.12).

To further enhance India’s

exports, potential items under this

category as per 6-digit commodity

classification are presented in

Table 4.13.

Table 4.12: Iran’s Major Suppliers of Mineral Fuels and Oils (HS-27)


2006 2010 2006 2010

World 1626.1 1472.5 100.0 100.0Singapore - 671.4 - 45.6

Ukraine - 202.7 - 13.8

UAE - 182.7 - 12.4

Turkmenistan - 67.0 - 4.5

Russia - 50.2 - 3.4

Germany - 34.1 - 2.3

India 687.7 31.7 42.3 2.2China 42.8 28.2 2.6 1.9

Saudi Arabia - 26.1 - 1.8

Bahrain - 24.5 - 1.7



Table 4.13: Potential Items of Exports to Iran under Mineral Fuels and Oils (HS-27)


270400 Coke & semi-coke of coal 407.2 197.9

271011 Aviation spirit 906.3 15071.7

271019 Light petroleum distillates nes 111.8 21029.5

271312 Petroleum coke, calcined 16.3 121.0




Optical, Photo and Medical

Apparatus (HS-90)

Iran’s imports of optical, photo

and medical apparatus amounted

to US$ 1.4 bn in 2010, from

US$ 252.1 mn seen in 2006.

Main suppliers in 2010 were UAE,

Germany and China (Table 4.14).

India’s exports of these items to

Iran amounted to US$ 10.9 mn in

2010, accounting for a marginal

0.8% of Iran’s total imports.

With India’s export capability

and the rising demand in Iran,

the potential items of exports

under this category, as per 6-digit

commodity classification have

been presented in Table 4.15.

Table 4.14: Iran’s Major Suppliers of Optical, Photo and Medical Apparatus (HS-90)


2006 2010 2006 2010

World 252.1 1393.0 100.0 100.0UAE - 293.4 - 21.1

Germany - 213.2 - 15.3

China 53.2 129.8 21.1 9.3

UK - 108.5 - 7.8

Netherlands 36.6 108.5 14.5 7.8

Switzerland - 99.6 - 7.2

France 50.7 62.7 20.1 4.5

Japan 30.0 57.5 11.9 4.1


Italy - 51.4 - 3.7

Belgium - 22.5 - 1.6

Thailand - 20.5 - 1.5



Table 4.15: Potential Items of Exports to Iran under Optical, Photo andMedical Apparatus (HS-90)


900110 Opticalfibres,opticalfibres bundles & cables, oth than those of heading 85.44 20.5 85.0 901580 Surveying, hydrographic, oceanographic, meteorological/ geophysical inst 21.0 14.9 901811 Electro-cardiographs 3.1 5.3 901839 Needles, catheters, cannulae and the like, nes 111.9 83.7 902214 X-rays apparatus, medical/ surgical/veterinary use 40.5 137.9 903300 Parts & access nes for machines, appliances, inst or app of Chapter 90 5.4 86.9




Pharmaceutical Products

(HS-30)

In 2010, Iran’s imports of

pharmaceutical products

amounted to US$ 1.3 bn,

compared to US$ 204.5 mn in

2006. Imports from India stood

at US$ 54.1 mn with a share of

4.3% in Iran’s total imports, a

sharp decline from 10.1% share

in 2006. The major suppliers to

Iran are Switzerland, Germany

and France, which together

have a market share of 54.3%

(Table 4.16).

Therefore, efforts to enhance

these exports to Iran would

entail focus on potential items,

asper6-digitclassificationcode,

presented in Table 4.17

Table 4.16: Iran’s Major Suppliers of Pharmaceuticals (HS-30)


World 204.5 1255.2 100.0 100.0


Germany - 225.5 - 18.0

France 81.9 194.1 40.1 15.5

UAE - 83.6 - 6.7

Austria - 82.9 - 6.6

UK - 63.2 - 5.0

India 20.6 54.1 10.1 4.3

Netherlands 73.9 52.5 36.1 4.2

Italy - 39.4 - 3.1

Belgium - 35.1 - 2.8

Denmark - 34.9 - 2.8

USA - 21.4 - 1.7

Canada 16.0 20.2 7.8 1.6




Table 4.17: Potential Items of Exports to Iran under Pharmaceuticals (HS-30)


300310 Penicillin or streptomycin and

their derivatives, formulated, in bulk 8.2 71.1

300339 Medicines containing hormones 6.1 156.4

300390 Medicaments 63.8 240.0

300410 Penicillin or streptomycin and their

derivatives, in dosage 24.2 259.8

300420 Antibiotics, in dosage 47.6 572.6

300450 Vitamins and their derivatives, in dosage 15.7 221.9 300490 Medicaments nes, in dosage 703.6 3954.7

S ource: Trade Map, ITC Geneva



Residues, Waste of Food

Industry (HS-23)

Iran’s imports of residues and

waste of food industry rose to

US$ 843.5 mn in 2010, from

US$ 18.7 mn seen in 2006.

Main suppliers in 2010 were

Switzerland, UAE and Netherlands

together catering to 76.1% of

Iran’s imports. India’s exports of

these items to Iran amounted to


for 2.4% of Iran’s total imports

(Table 4.18).

Potential item of exports to Iran

as per 6-digit HS commodity code

would include soya-bean oil cake

and solid residues (Table 4.19).

Table 4.18: Iran’s Major Suppliers of Residues, Waste of Food Industry (HS-23)


2006 2010 2006 2010

World 18.7 843.5 100.0 100.0UAE - 314.2 - 37.3


Netherlands 2.6 113.6 13.8 13.5

Austria - 40.4 - 4.8

Argentina - 30.7 - 3.6

Kazakhstan 12.6 23.5 67.3 2.8

India 0.8 20.3 4.3 2.4Turkmenistan - 13.5 - 1.6

Azerbaijan - 12.3 - 1.5

UK - 12.1 - 1.4

Malta - 6.7 - 0.8

Germany - 5.8 - 0.7

- Not available/negligible


Table 4.19: Potential Items of Exports to Iran under Residues, Waste of Food Industry (HS-23)


230400 Soya-bean oil-cake and other solid residues 735.5 1652.7230649 Oil-cake and other solid residues 6.1 214.1




Sugar and Sugar Confectionery

(HS-17)

Iran’s imports of sugar and sugar

confectionery rose to US$ 790

mn in 2010, from US$ 11.3 mn

seen in 2006. Main suppliers in

2010 were UAE and Switzerland,

together accounting for 82.9% of

Iran’s total imports. India’s exports

of these items to Iran amounted to


for a marginal share 0.9% of Iran’s

total imports (Table 4.20).

Potential export items to Iran

under this category, as per

6-digit HS commodity code would

include raw sugar and refined

sugar (Table 4.21).

Table 4.20: Iran’s Major Suppliers of Sugar and SugarConfectionery (HS-17)


2006 2010 2006 2010

World 11.3 790.0 100.0 100.0

UAE - 543.8 - 68.8


Brazil - 69.6 - 8.8

UK - 24.6 - 3.1

Germany - 23.6 - 3.0

India 0.1 6.8 0.9 0.9

China 0.7 4.0 6.6 0.5

Pakistan - 3.8 - 0.5

Turkey - 3.7 - 0.5

Netherlands 0.5 2.5 4.6 0.3

New Zealand 0.3 1.3 2.6 0.2



Table 4.21: Potential Items of Exports to Iran under Sugar and Sugar Confectionery (HS-17)


170111 Raw sugar, cane 758.9 248.3 170199 Refinedsugar 3.5 585.6




Miscellaneous Chemical

Products (HS-38)

Iran’s imports of miscellaneous

chemical products amounted to

US$ 738.8 mn in 2010, with the

major suppliers being UAE, China

and Germany (Table 4.22).

India’s exports of misc. chemical

products to Iran increased from

US$ 27 mn in 2006 to US$ 36.4

mn in 2010, with a share of 4.9%

in Iran’s total imports, a sharp

decline from the 19.6% share in

2006. To further enhance these

exports to Iran, potential items

of India’s exports as per 6-digit

HS commodity code, have been


Table 4.22: Iran’s Major Suppliers of Misc. Chemical Products (HS-38)


2006 2010 2006 2010

World 137.6 738.8 100.0 100.0UAE - 216.2 - 29.3China 55.1 113.4 40.0 15.3Germany - 85.6 - 11.6France 19.1 47.0 13.9 6.4India 27.0 36.4 19.6 4.9Italy - 26.6 - 3.6Belgium - 22.9 - 3.1Turkey - 22.4 - 3.0Malaysia 5.8 22.0 4.2 3.0Netherlands 14.3 17.0 10.4 2.3Switzerland 0.1 16.5 0.1 2.2UK - 15.7 - 2.1

Japan 8.3 11.7 6.0 1.6



Table 4.23: Potential Items of Exports to Iran under Misc. Chemical Products (HS-38)


381121 Lubricatg oil additives cntg pet oils/oils obtaind from bitu minerals 76.4 26.3 381230 Anti-oxidisg prep & other compound stabilizers for rubber or plastics 32.3 50.0 381511 Supportd catalysts,with nickel/nickel compounds as the active subst 22.9 21.0 381512 Supportd catalysts,w precious metal/ compds thereof as the activ subs 13.4 39.4 381600 Refractory cements,mortars,concretes and similar compositions, nes 30.3 29.2 382311 Stearic acid 14.2 24.1 382370 Industrial fatty alcohols 26.2 93.0 382490 Chemical/allied industry preparations/ prods nes 75.6 103.1




Aluminium and Articles

(HS-76)

Iran’s imports of Aluminium

and articles amounted to

US$ 582.3 mn in 2010, with the

main suppliers being UAE, China

and Tajikistan. India’s exports of


US$ 5.6 mn in 2010, accounting for

close to 1% of Iran’s total imports,

a sharp decline from 11.5% share

in 2006 (Table 4.24).

Under this category, potential

items of India’s exports to

Iran as per 6-digit commodity

classification would include

aluminium unwrought, articles

of aluminium, aluminium foil

and household articles made of

aluminium (Table 4.25).

Table 4.24: Iran’s Major Suppliers of Aluminium and Articles (HS-76)


2006 2010 2006 2010

World 73.0 582.3 100.0 100.0UAE - 210.9 - 36.2

China 27.8 108.2 38.1 18.6

Tajikistan - 36.9 - 6.3

Germany - 36.4 - 6.2

UK - 34.1 - 5.9

Iraq - 29.7 - 5.1

Turkey - 24.6 - 4.2

India 8.4 5.6 11.5 0.96South Korea - 17.7 - 3.0

Bahrain - 13.0 - 2.2

Italy - 9.9 - 1.7



Table 4.25: Potential Items of Exports to Iran under Aluminiumand Articles (HS-76)


760110 Aluminium unwrought, not alloyed 178.3 770.7 760120 Aluminium unwrought, alloyed 80.0 34.3 760612 Plate,sheet or strip,aluminium alloy, rect or sq,exceeding 0.2mm thick 23.1 56.9 760719 Foil, aluminium, not backed and not exceeding 0.2mm thick, nes 49.6 28.1 761519 Table, kitchen, household goods nes, of aluminium 28.1 58.7 761699 Articles of aluminium 8.5 103.6




Edible Fruits (HS-08)

Iran’s imports of edible fruits rose

to US$ 571.1 mn in 2010, from

US$ 99.6 mn seen in 2006. Main

suppliers in 2010 were UAE,

Philippines and Turkey. India’s

exports of these items to Iran

amounted to US$ 7.7 mn in 2010,

accounting for a marginal 1.4% of

Iran’s total imports (Table 4.26).


items of exports to Iran as per

6-digit HS commodity code, are


Table 4.26: Iran’s Major Suppliers of Edible Fruits (HS-08)


2006 2010 2006 2010

World 99.6 571.1 100 100.0UAE - 215.8 - 37.8

Philippines 90.0 144.3 90.3 25.3

Turkey - 76.7 - 13.4

Pakistan 5.7 39.0 5.7 6.8

Egypt 2.6 35.8 2.6 6.3

South Africa - 13.4 - 2.3

Ecuador - 12.2 - 2.1

India 1.2 7.7 1.3 1.4China - 6.9 - 1.2

Cyprus - 4.6 - 0.8



Table 4.27: Potential Items of Exports to Iran under Edible Fruits (HS-08)


080132 Cashew nuts, without shell, fresh or dried 3.4 561.9 080300 Bananas including plantains, fresh or dried 392.4 25.1 080450 Guavas, mangoes and mangosteens, fresh or dried 9.9 228.7 080810 Apples, fresh 8.9 13.1




Oilseed (HS-12)

Iran’s imports of oilseed rose to

US$ 545.7 mn in 2010, from

US$ 80.5 mn seen in 2006.

Main suppliers in 2010 were

Switzerland, UAE and

Netherlands, with Switzerland

and UAE catering to 75% of

Iran’s imports. India’s exports of



for 1.3% of Iran’s total imports

(Table 4.28).


items of exports to Iran, as per

6-digit HS commodity code, are


Table 4.28: Iran’s Major Suppliers of Oilseed (HS-12)


2006 2010 2006 2010

World 80.5 545.7 100.0 100.0Switzerland - 271.0 - 49.7

UAE - 139.4 - 25.5

Netherlands 50.2 30.7 62.4 5.6

Argentina - 25.8 - 4.7

UK - 18.3 - 3.3

Afghanistan - 9.8 - 1.8

India 0.6 6.9 0.7 1.3France - 5.3 - 1.0

Pakistan 0.9 5.0 1.1 0.9

Paraguay 5.0 4.9 6.2 0.9



Table 4.29: Potential Items of Exports to Iran under Oilseed (HS-12)


120220 Ground-nuts shelled 10.7 392.2120740 Sesamum seeds 22.5 455.6120991 Seeds, vegetable, nes for sowing 60.2 22.0120999 Seeds, fruit and spores for sowing, nes 11.6 12.5




5. Observations and Recommendations

As observed in the preceding paragraphs, India’s trade relations with Iran has witnessed a robust trend in recent years, with total bilateral trade between the two countries having risen from US$ 520 mn in 2001 to US$ 10.5 bn in 20104. As per Ministry of Commerce and Industry, Government of India, bilateral trade between the two countries had reached US$ 13.7 bnduringthefiscalyear2010-11.The two countries aim to increase their bilateral trade to US$ 25 bn by 20155.

India is a major source for Iran’s global imports of organic chemicals, cereals, articles of iron or steel and manmade staple fibres,accountingforasignificantshare in Iran’s global imports. However, in the case of other major commodities imported by Iran, such as machinery and instruments, iron and steel, pharmaceuticals, vehicles other than railway, India’s share in Iran’s global imports is low, and in

some cases has even declined over the years. Given India’s export capability in these sectors, and the huge demand existing in Iran, potential exist to further enhance India’s trade relations with Iran in line with potential sectors which present export opportunities for India.

WithIndia’stradedeficitwithIranwitnessing a rising trend in recent years, strategy to enhance trade relations with Iran, and thereby bridge the rising trade gap, would entail identification of potentialitems of India’s exports (upto 6-digit commodity classification)in line with Iran’s imports demand and India’s export capabilities, which has been undertaken in this study, as also identificationof potential exporters who could benefitfromprevailingandfuturemarket opportunitites in Iran.

Towards this end, Industry Associations and Chambers of Commerce and Industries could focus on the potential items and sectors identified to boosttrade between the two countries. Various trade promoting activities such as organizing Business to Government(B2G)andBusiness-to-Business (B2B) delegationvisits relating to identified

potential sectors; organizingfairs and exhibitions in Iran to showcase competencies of Indian corporate and to capture marketopportunities;andtie-upswith select industry associations/chambers in Iran in potential sectors would serve to strengthen India’s trade linkages with Iran.

Trade with Iran – Facilitation

With a view to facilitate trade relations, India and Iran have put in place an enabling bilateral payments and settlement arrangements. Under this arrangement, UCO Bank has been allowed to open “Special Non-Resident Rupee Vostro Account” in the name of Iranian Banks, viz. Parsian Bank, Bank Pasargad, EN Bank and Saman Bank, subject to certain permissible credits and debits. These include, among others: Permissible Credits – Funding by inward remittances in foreign currency of the account of the Iranian banks for meeting payment obligations arising out of exports of goods including project exports to Iran; Permissible Debits – (i) Payment towardsexport proceeds realization; (ii) Repayment of Line of Creditextended by Exim Bank to Iran;

4 As per Trade Map, ITC, UNCTAD.5 EconomicTimes,“India,Iranlookat$25billiontradeby2015”,March12,2012(Onlineedition).



(iii) Other debits for meeting payments towards statutory dues, levies, cess, bank charges, etc, and (iv) Any other credits /debits specifically permitted byRBI. Under this Rupee Payment Mechanism, Indian exporters are allowed to receive export payments in Indian Rupees.

Indian exporters are also allowed to receive advance payment against exports from Iranian importers in Indian rupees

though the above Rupee Payment Mechanism, subject to certain conditions / modalities. Further, ‘Setting-off’ of export receivables against import payables in respect of the same overseas buyer and supplier with facility to make / receive payment of the balance of export receivables / import payables, if any, through the Rupee Payment Mechanism, may also be allowed, subject to certain conditions.

In light of the huge potential to enhance India’s exports to Iran and thereby boost bilateral trade relations, such endeavours to facilitate bilateral trade and payments system would need to be encouraged, while efforts would need to be made to ensure the smooth functioning of this payment arrangement so that Indian exporters to Iran are benefitted.



ANNEXURE I

INTERNATIONAL SANCTIONS AGAINST IRAN6

The international sanctions enforced against Iran impose significant constraints on theability of foreign firms to investin Iran, as well as domestic companies to trade with the West. Sanctions commonly bar nuclear, missile and certain military exportstoIran;investmentsinoil,gas and petrochemicals; exportsof refined petroleum products;business dealings with the Iranian RepublicanGuardCorps;bankingand insurance transactions, including with the Central Bank of Iran;andshipping.

UN Sanctions

The UN ratified four rounds ofsanctions against Iran between 2006 and 2010 in reaction to its refusal to halt uranium enrichment and co-operate with the International Atomic Energy Association (IAEA). Thesesanctions include a ban on the supply of heavy weaponry and nuclear-related technology to Iran, a block on Iranian arms

exports, and an asset freeze on key individuals and companies. Resolution 1929, passed in 2010, mandates cargo inspections to detect and stop Iran’s acquisition of illicit materials.

The sanctions also impose a freezeoffundsandfinancialassetsowned or controlled by companies or persons associated with Iran’s nuclear or missile programmes. Exceptions to this freeze include deals made in prior contracts. The fourth set of sanctions against Iran was passed by the UN in June 2010 as a result of the country’s failure to suspend its nuclear enrichment programme. These UN sanctions, which were watered down in order to gain support from Russia and China, target a further 40 companies and organisations, many of which are associated with the Pasdaran, Army of the Guardians of the Islamic Revolution. In addition, the resolution bans Iran from pursuing activity related to ballistic missiles capable of delivering nuclear weapons. It also calls on all countries to co-operate in inspections of cargo if there are reasonable grounds to believe that the cargo could contribute to nuclear programme. Finally, the resolution calls for countries to block financialtransactions, including insurance and reinsurance, and ban the licensing of Iranian banks.

Bilateral sanctions against Iran

The US has longstanding comprehensive sanctions in place on Iran. Since April 1980 when diplomatic relations between the two countries were broken, the US has imposed successive rounds of sanctions, citing Iran’s support for international terrorism, human rights violations and refusals to co-operate with the IAEA.

The US sanctions prohibit almost all trade with Iran, making some exceptions only for activity “intended to benefit the Iranianpeople”, including the export of medical and agricultural equipment, humanitarian assistance and trade in “informational” materials such as filmsandpublications.

In early 2010, the Comprehensive Iran sanctions, Accountability and Divestment Act (CISADA) waspassed by the US government, which imposed sanctions on companies facilitating trade of refined oil products throughinsurance, re-insurance and shipping.

A new law signed by US in December 2011, imposed new sanctionsonfinancial institutionsdealing with Iran’s central bank with intent to hamper Tehran’s ability to sell oil abroad.

6Dun&Bradstreet;EIU



In late 2011 the US, UK and Canada announced more bilateral sanctions on Iran, in reaction to an IAEA report which suggested Iran’s nuclear programme may have a military purpose. The US expanded sanctions to target companies that aid Iran’s oil and petrochemical industries, while theUKorderedallBritishfinancialinstitutions to stop doing business with their Iranian counterparts, including the Iranian central bank.

The EU has imposed its own restrictions on trade in equipment which could be used for uranium enrichment and has put in place an asset freeze on a list of individuals and organisations which it believes are helping advance the country’s nuclear programme. It has also banned the individuals on the list from entering the EU. In addition, the EU banned the export to Iran of key equipment and technology fortherefiningandproductionofnatural gas in 2011. In January 2012, the EU agreed to an oil embargo on Iran, effective from

July, and to freeze the assets of Iran’s central bank.

Several other countries including Switzerland, Japan, Australia and Canada have also imposed bilateral sanctions on Iran in recent years in response to Iran’s lack of co-operation with the IAEA.

Banking Sector Sanctions

In 2006, the US Treasury issued a regulationprohibitingUSfinancialinstitutions from handling any assets directly or indirectly related to Bank Sedarat. Since then, Bank Sepah, Bank Melli, Bank Mellat and Bank Saderat, the Bahrain based Future bank and the Export Development Bank of Iran have all been designated for their involvement in proliferation activities: designation allows the US authorities to freeze any assets of the banks concerned. In 2008, the EU also froze assets of Bank Melli, Iran’s largest bank and in 2010, the EU tightened banking sanctions by stepping

up its monitoring of banks doing business with Iran. In 2011, it sanctioned the Iranian owned Hamsburg based European-Iranian Trade Bank over its alleged links with Iran’s nuclear programme.

In 2008, the UN Security Council Resolution(UNSCR)1803calledfor all states to exercise vigilance over activities between financialinstitutions in their territories and any bank domiciled in Iran (and branches and subsidiaries abroad).In2010,anewlegislationcame into force in the US which could result in Washington taking action against any bank that does business with any of the 21 blacklisted Iranian banks. In May 2011, the Bank of Industry and Mine, Iran was the latest institution to be added to the list. As the nuclear issue remains unresolved, there is a risk of additional US action that may further curtail Iranian banking activity.



ANNEXURE II

FOREIGN INVESTMENTS IN IRAN AND INVESTMENT REGULATIONS

RECENT TRENDS IN FDI INFLOWS INTO IRAN

According to UNCTAD’s World Investment Report, 2011, FDI inflowsintoIranhavedeclinedtoUS$ 3.1 bn in 2005 to US$ 1.6 bn in 2008, before picking up in 2009 to reach US$ 3.6 bn in 2010 (Table 1).

As regards FDI inward stock in Iran, cumulative FDI inward stock rose from US$ 2 bn in 1990 to US$ 2.6 bn in 2000, and further to US$ 27.6 bn in 2010 (Table 2).

ThemajorsectorsofFDI inflowsinto Iran include: oil and gas industries, vehicle manufacture, copper mining, petrochemicals, foods, and pharmaceuticals. Asian countries such as UAE, Singapore, Indonesia and Oman are among the major investors in Iran.

INVESTMENT LAW, REGULATIONS AND INCENTIVES - HIGHLIGHTS7

Foreign Investment Law

The government ratified theForeign Investment Promotion and ProtectionAct(FIPPA)inOctober2002. FIPPA overhauled and consolidated various older laws that had loosely regulated foreign investment. Though technically implemented in late 2002, most FIPPA regulations were not common public knowledge or used until late 2003. Despite the enactment of the FIPPA, political instability and on-going international sanctions against Iran continued to deter foreign investment in April 2011.

The 26-article FIPPA streamlined procedures for foreign investors while setting certain limits. It allows for international

arbitration in legal disputes, a major issue for foreign investors unwilling to subject themselves to Iranian judicial system. Iran had previously allowed equity participation in companies, but the FIPPA formally provides the first legal framework for foreigninvestment under contracts such as build-operate-transfer (BOT),buy-back (under which foreign oil companies operate) and civilpartnerships. The legislation states that foreign investment will be guaranteed compensation in the event of nationalisation.

Iran’s constitution prohibits granting oil concessions to foreign investors;instead,theMinistryofPetroleum may grant “buy-back” contracts to foreign investors. These contracts are a hybrid service contract/production-sharing agreement, through which foreign companies invest inanddevelopoilfieldsand then

Table 1: Iran - FDI Inflows, 2005-2010 (US$ mn)

2005 2006 2007 2008 2009 2010

FDIInflows 3,136 1,647 1,670 1,615 3,016 3,617

Source: UNCTAD World Investment Report 2011

Table 2: Iran - FDI Inward Stock, 1990, 2000 & 2010 (US$ mn)

1990 2000 2010

FDI Inward Stock 2,039 2,597 27,600

Source: UNCTAD World Investment Report 2011

7http://www.iran-investment.org, http://www.investiniran.ir/home-en.html



transfer the completed facility to the National Iranian Oil Company (NIOC). Then they recoup theirinvestments from the proceeds of oil andgas sales; theamount isbasedonanagreedprofit,anditis paid in the form of an allocation of a share of NIOC’s production. Under the regulations addressing “Conditions of Non-Oil Buy-Back Contracts”, which the Council of MinistersratifiedinJanuary2001,buy-back contracts were extended to non-oil goods.

According to the Foreign Investment Law 1988, nine sectors of the economy are opened for foreign investment. These sectors are:

1. Agriculture 2. Mining3. Industry • Foodandbeverage • Textile,clothing • Cellulosic print and

publication • Chemicals,oilderivatives,

rubber and plastics • Non-metallic minerals

other than coal and oil • Basicmetals • Machinery and

equipments • Medical, optical and

precision instruments • Electrical and electronic

machinery & equipments

4. Electricity, Gas supply5. Construction6. Transport and

Communications7. Services • FinancialServices • Tourism • PublicAffairs • UrbanServices • Educationandresearch • Other services

(engineering&design)

Restrictions

The Foreign Investment Promotion and Protection Act (FIPPA) of 2002 prohibit foreigndominance in Iranian industry. Article2(d)statesthattheforeignshare of the market may not exceed 25% in any one sector or 35% in an individual industry. However, these ratios do not apply to foreign investment for the production of goods and services for export purposes, other than for crude oil. The Council of Ministers determines the fields and extentof investment in each case.

Forms of Foreign Investments

Foreign investments are admitted under two categories:

• Inareaswhere theactivityofprivate sector is permitted

• Foreign investment in all

sectors within the framework of “Civil Partnership”, “Buy Back” and BOT schemes where the return of capital and profits accrued is solelyemanated from the economic performance of the project in which the investment is made, and such return of capital and shall not be dependent upon a guarantee by the Government or government companies and /or banks.

Taxation

According to Article 3 of the Law Concerning the Attraction and Protection of Foreign Investment, all capital invested inIranandtheprofitsthataccruetherefrom, shall be subject to government protection. All rights, tax exemptions, and facilities accorded to domestic and private productive enterprises are also available to foreign capital and corporations.

Branches and agencies of foreign companies which have been registered according to the relevant regulations in Iran, and by virtue of their articles of association are not authorized to engage in profitable activitiesbut can do marketing and collect economic Information, are not liable to any taxation on the



sums received from the mother company as a revolving fund. However, if it is proven that the said branches and agencies are engagedinprofitableactivitiesinIran and are acquiring an income therefrom, the sums earned shall be subject to taxation according to the respective regulations.

Articles 132 of the law of Direct Taxation specify the major tax exemptions are as follows:

• Incomeearnedbyproductiveenterprise and mining units which have obtained an establishment license, or an identification card fromthe Ministry of Industry, Ministry of Mines and Metals or the Ministry of Jihad-e-Sazandegi, shall be exempt from taxation for a period of eight, six, or four years from the commencement date of their operation.

• If such units are developedin deprived regions of Iran, an equivalent of half of the

aforementioned periods of tax exemptions shall be added to their legal period of tax exemption.

• In addition, 20% of taxableincome earned from manufacturing, mining which have or will receive an operating license from the said ministries, are exempt from taxation.

• 100% of income earnedthroughtheexportoffinishedindustrial goods, and 50% of income gained from the export of other items and goods, shall be exempt from taxation.

• Income earned from allagricultural activities, farming, animal husbandry, fisheriesand the like are also exempt from taxation.

• In addition to the abovecases, other exemptions and tax breaks have been outlined in the Law of Direct Taxation. Ministries, governmental organizations, municipalities, some public utility institutions, cultural,religiousandscientific

foundations are also exempt from taxation.

• Taxable income of foreigncontractors in Iran, active in areas such as construction, technical installations, transportation, designing plans for buildings and installations, topographical surveying, drawing, supervision and technicalcalculations,isaflatrate of 12 % of their annual receipts in all instances.

• Foreigninsurancecompanieswhichearntheirprofitthroughreinsurance may be subject to a tax at the rate of 2% of the premium collected and the interest accrued from their deposits in Iran. In cases where Iranian insurance companies acting in the country of citizenship of the foreign reinsurance company, are exempt from payment of taxes on reinsurance activities, the foreign establishments shall also be exempted from payment of taxes to the Iranian government.



ANNEXURE III

1. Machinery & Instruments (HS- 84)

2. Iron & Steel (HS- 72)

HS Code Commodities Iran’s Global Imports, India’s Global Exports, 2010 (US$ mn) 2010 (US$ mn)

840991 Parts for spark-ignition type engines nes 259.6 165.6 840999 Parts for diesel and semi-diesel engines 181.4 456.6 841090 Parts of hydraulic turbines & water wheels 12.9 32.1 841199 Parts of gas turbines nes 883.0 120.1 841430 Compressors of a kind used in refrigerating equipment 264.3 23.3 841440 Air compressors mounted on a wheeled chassis for towing 73.8 31.7 841480 Air or gas compressors, hoods 66.2 241.4 841510 Air conditioning machines window or wall types, self-contained 169.8 17.1 841810 Combinedrefrigerator-freezers,fittedwithseparateexternaldoors 128.4 37.8 844250 Printing type, blocks, plates, & other printing components 6.9 20.5 845899 Lathes for removing metal 46.3 37.5 847130 Portable digital computers <10kg 308.8 29.1 847170 Computer data storage units 117.8 121.7 847989 Machines & mechanical appliances nes having individual functions 267.9 113.6 848180 Taps, cocks, valves and similar appliances, nes 164.3 334.4 848210 Bearings, ball 113.8 41.1 848410 Gaskets of metal sheeting combined with other material 23.1 52.2



720211 Ferro-manganese(weightmorethan2%ofcarbon) 68.1 101.6 720219 Ferro-manganese(weightnomorethan2%ofcarbon) 39.2 31.3 720839 Hot roll iron/steel nes, coil >600mm x <3mm 1098.5 74.5 720851 Hot roll iron/steel, not coil >600mm x >10mm 516.8 47.7 720916 Cold rolled iron/steel, coils >600mm x 1-3mm 60.4 76.5 720917 Cold rolled iron/steel, coils >600mm x 0.5-1mm 204.4 60.6 720918 Cold rolled iron/steel, coils >600mm x <0.5mm 67.2 231.8 721049 Flat rolled prod,i/nas,plated or coated with zinc,>/=600mm wide, nes 166.2 662.5 721012 Flat rolld prod,i/nas,platd or coatd with tin,>/=600mm wide, <0.5mm thk 154.3 66.4 721070 Flat rolled products, painted, varnished 96.6 174.3 721391 Hot rolled bar/rod, irregular coils, <14mm diam 245.2 64.4 721934 Flat rolled prod, stainless steel, cr,w>/=600mm,0.5mm</=thick <1mm 87.7 16.3 721990 Flat rolled prod, stainless steel, 600mm or more wide, nes 54.5 33.3


POTENTIAL ITEMS OF INDIA’S EXPORTS TO IRAN(AS PER 6-DIGIT HS COMMODITY CLASSIFICATION)



4. Vehicles other than Railway (HS- 87)


870190 Wheeled tractors 64.3 516.9 870321 Automobiles with reciprocating piston engine displacing not more than 1000 cc 7.1 2110.2 870322 Automobiles with reciprocating piston engine displacing > 1000 cc to 1500 cc 14.1 2151.8 870323 Automobiles w reciprocatg piston engine displacg > 1500 cc to 3000 cc 219.0 110.0 870410 Dump trucks designed for off-highway use 53.2 310.3 870600 Chassisfittedwenginesforthevehiclesofheading Nos 87.01 to 87.05 25.7 155.5 870810 Bumpers and parts for motor vehicles 11.4 207.9 870840 Tansmissions for motor vehicles 129.2 148.7 870850 Drive axles with differential for motor vehicles 58.5 74.4 871419 Motorcycle parts 74.5 99.5 871499 Bicycle parts 11.9 65.0


3. Electrical and Electronic Equipment (HS-85)


850231 Wind-powered generating equipment 6.6 122.9 851140 Starter motors 5.2 51.9 851420 Industrial& laboratory electric induction/dielectric furnaces & ovens 14.1 15.1 852990 Parts suitable f use solely/princ w the app of headings 85.25 to 85.28 282.4 77.3 854511 Carbon or graphite electrodes, of a kind used for furnaces 128.8 211.3




5. Plastics and Articles (HS-39)


390110 Polyethylenehavingaspecificgravityoflessthan0.94 85.6 23.2 390120 Polyethylenehavingaspecificgravityof0.94ormore 162.7 77.5 390210 Polypropylene 120.4 800.0 390690 Acrylic polymers nes, in primary forms 94.9 42.0 390760 Polyethylene terephthalate 93.9 458.4 390950 Polyurethanes in primary forms 167.9 16.9 391231 Carboxymethylcellulose and its salts 4.0 12.3 391290 Cellulose derivatives nes, in primary forms 10.6 9.2 391400 Ion-exchangers based on polymers 3.9 17.7 392069 Film and sheet etc, non-cellular etc, of polyesters 8.4 130.5 392329 Sacksandbags(includingcones)ofplasticsnes 6.2 148.1


6. Mineral Fuels & Oils (HS-27)


270400 Coke & semi-coke of coal 407.2 197.9 271011 Aviation spirit 906.3 15071.7 271019 Light petroleum distillates nes 111.8 21029.5 271312 Petroleum coke, calcined 16.3 121.0


7. Optical Photo, Technical, Medical etc Apparatus (HS-90)


900110 Opticalfibres,opticalfibresbundles&cables,oththanthose of heading 85.44 20.5 85.0 901580 Surveying, hydrographic, oceanographic, meteorological/ geophysical inst 21.0 14.9 901811 Electro-cardiographs 3.1 5.3 901839 Needles, catheters, cannulae and the like, nes 111.9 83.7 902214 X-rays apparatus, medical/surgical/veterinary use 40.5 137.9 903300 Parts & access nes for machines, appliances, inst or app of Chapter 90 5.4 86.9




10. Sugar and Sugar Confectionery (HS-17)


170111 Raw sugar, cane 758.9 248.3170199 Refinedsugar 3.5 585.7


9. Residues, Wastes of Food Industry (HS- 23)


230400 Soya-bean oil-cake and other solid residues 735.5 1652.7230649 Oil-cake and other solid residues 6.1 214.1


8. Pharmaceutical Products (HS-30)


300310 Penicillin or streptomycin and their derivatives, formulated, in bulk 8.2 71.1 300339 Medicines containing hormones 6.1 156.4 300390 Medicaments 63.8 240.0 300410 Penicillin or streptomycin and their derivatives, in dosage 24.2 259.8 300420 Antibiotics, in dosage 47.6 572.6 300450 Vitamins and their derivatives, in dosage 15.7 221.9 300490 Medicaments nes, in dosage 703.6 3954.7



381121 Lubricatg oil additives cntg pet oils/oils obtaind from bitu minerals 76.4 26.3 381230 Anti-oxidisg prep & other compound stabilizers for rubber or plastics 32.3 50.0 381511 Supportd catalysts,with nickel/nickel compounds as the active subst 22.9 21.0 381512 Supportd catalysts,w precious metal/compds thereof as the activ subs 13.4 39.4 381600 Refractory cements,mortars,concretes and similar compositions, nes 30.3 29.2 382311 Stearic acid 14.2 24.1 382370 Industrial fatty alcohols 26.2 93.0 382490 Chemical/allied industry preparations/prods nes 75.6 103.1


11. Miscellaneous Chemical Products (HS-38)



13. Edible Fruits (HS-08)


080132 Cashew nuts, without shell, fresh or dried 3.4 561.9 080300 Bananas including plantains, fresh or dried 392.4 25.1 080450 Guavas, mangoes and mangosteens, fresh or dried 9.9 228.7 080810 Apples, fresh 8.9 13.1


12. Aluminium and Articles (HS-76)


760110 Aluminium unwrought, not alloyed 178.3 770.7 760120 Aluminium unwrought, alloyed 80.0 34.3 760612 Plate,sheet or strip,aluminium alloy, rect or sq, exceeding 0.2mm thick 23.1 56.9 760719 Foil, aluminium, not backed and not exceeding 0.2mm thick, nes 49.6 28.1 761519 Table, kitchen, household goods nes, of aluminium 28.1 58.7 761699 Articles of aluminium 8.5 103.6


14. Oil Seed (HS-12)


120220 Ground-nuts shelled 10.7 392.2120740 Sesamum seeds 22.5 455.6120991 Seeds, vegetable, nes for sowing 60.2 22.0120999 Seeds, fruit and spores for sowing, nes 11.6 12.5


potential for enhancing india’s trade with iran: a … · the results of research studies can...

Documents